Introduction
Changes to both the Workplace Relations Act 1996 (WR Act) and the Workplace Relations Regulations 2006 require new minimum wages for all Australians.
This does not necessarily mean bad news for your business. While you may have to increase the pay of some workers, the system will provide fairer employment for all employees in the long run. This will ensure employee satisfaction, irer employment for all employees in the ling run. ployees details and hours means there is l.
Who sets the minimum wages?
Under Workchoices laws, the Australian Fair Pay Commission (Fair Pay Commission) is responsible for setting and adjusting minimum wages for employees in the federal workplace relations system. This includes:
- the Federal Minimum Wage (FMW);
- classification-based wages in Australian Pay and Classification Scales (Pay Scales), including basic piece rates of pay for piece workers; and
- casual loadings.
The Fair Pay Commission is an independent statutory body which sets special FMWs for juniors, trainees and apprentices (including school-based apprentices) and employees with a disability. It decides the timing, scope and frequency of wage reviews, the manner in which wage reviews are conducted and when wage decisions come into effect.
Their objective is to promote economic prosperity of society – of course they take into account many factors such as the needs of the low paid and unemployed.
Wage-Setting Decision
The Fair Pay Commission’s first wage setting was on 26 October 2006. It decided that from 1 December 2006, the following would be implemented:
- an increase of $0.72 to the standard FMW (to $13.47 an hour);
- an increase of $0.72 to basic periodic rates of pay in all Pay Scales up to $18.42 per hour (i.e. up to around $700 per week based on a standard 38-hour week); and
- an increase of $0.58 to basic periodic rates of pay in all Pay Scales above $18.42 per hour (i.e. above around $700 per week based on a standard 38-hour week).
The increases flow on to junior employees, trainees and apprentices, employees with a disability and basic rates of pay.
Australian Pay and Classification Scales
Minimum wages (including casual loadings) for employees covered by the federal system are no longer included in awards. Minimum wages are instead protected in Pay Scales, which form part of the Australian Fair Pay and Conditions Standard (the Standard).
Guaranteed basic rates of pay
Each classification under a Pay Scale has a corresponding basic rate of pay. This may be a basic hourly rate of pay or a basic piece rate of pay (payment based on the productivity of the employee). A basic rate of pay does not include incentive-based payments and bonuses, loadings, monetary allowances, penalty rates or any other similar entitlements. Instead those incentive-based payments and bonuses may be included in an award, a Notional Agreement Preserving State Award (NAPSA) or an agreement.
Every employee covered by a Pay Scale is guaranteed the applicable basic rate of pay for their classification. Employees who are not covered by a Pay Scale must be paid at least the standard FMW, which from 1 December 2006 is $13.47 per hour. Of course this will change periodically.
Employees covered by a workplace agreement or contract of employment must be paid at least the applicable basic rate of pay for their class. That rate will never fall below the equivalent award rate that would have applied immediately before the commencement of WorkChoices.
Guaranteed basic pay for guaranteed hours
Full-time and part-time employees engaged to work a specified number of hours per week are guaranteed a basic weekly payment based on those hours. Employees must also be paid for public holidays at the applicable basic rate.
Employees who are not engaged to work specified hours per week (e.g. casual employees) are guaranteed to be paid the applicable basic rate and any applicable casual loading for each hour they work.
Casual loadings
Casual employees are entitled to a casual loading on top of their basic hourly rate of pay. This makes up for the fact that they do not get annual leave allowances, sick leave allowances and other such benefits.
Casual employees covered by a workplace agreement are permitted a 20% casual loading on top of their basic rate of pay. Of course this may be negotiated up.
Casual employees covered by the standard FMW or a special FMW are also allowed a 20% loading. Casual employees covered by a basic piece rate of pay under a Pay Scale may have a casual loading component built into that rate of pay.
How often will an employee be paid?
Frequency of payment should be set out in either a Pay Scale, workplace agreement or written contract of employment.
Where there are no such provisions the default frequency of payment times on the appropriate Pay Scale will operate. If this is not applicable, employees should be paid fortnightly, in arrears.
Transitional awards
Employers in the federal system who are not covered by WorkChoices may continue with their current awards, which will be called ‘transitional awards’. The transitional awards will operate for five years. In this time, employers can choose whether to remain in the federal system (by incorporating as a trading or financial corporation) or move to a state system. | 
