Each year the federal Fair Work Commission determines if the minimum wages need to be increased. The Commission adjusts wages to keep up with the impact of financial changes that are occurring in the Australian economy. The Commission reviews cases put forward by the industry representatives, including the employer associations and the unions. It takes into account key factors, including changes in the Consumer Price Index (CPI).
Any job that is paid on the Award rates will be directly impacted. This includes apprentices, casuals, full-time, and part-time employees who are paid on Award rates. Overtime and other penalty rates will also change.
What happens if an employer does not raise the wage rates of affected employees?
If an employer does not increase the wages of those being paid on the Award rates, they could be severely penalised by the Fair Work Commission with an order to pay, plus heavy fines and possible jail. Also, the employees may make a successful claim for back payment later down the track, which could be years later and a lot of money for the employer.
How do I measure the total cost of the wage increase in my business?
Well, the wage increase must be applied to your total wages bill for those on Award rates. It will impact superannuation amounts as a flow-on effect, and any accruals such as annual leave or long service leave balances which are sitting on your books as a current liability.
We recommend your employees take their leave when it falls due and for employers to work with your employees to keep your annual leave liabilities as low as you can.
What can a business do to offset the added expense of high wages?
How to offset the added expense is a tough question. Many companies add the increase into their pricing of their products and services. For example, the price of menu items may go up in restaurants.
The best solution is to use this opportunity to review the business for opportunities to save money, control costs and improve profit. The announcement of the minimum wage increase is a good time to check that your inventory, suppliers’ contracts and overhead costs are fair and cost effective.
Why does Business Embassy want to help businesses deal with the wage increase?
Business Embassy wants to help you apply the increase appropriately. With the extra pressure on your operating costs of your business, we want to help you ensure your employees still feel secure in their jobs. We are Your Go To Experts to help you manage your labor costs effectively. Don’t hesitate to give us a call. We offer a free, confidential 30-minute telephone conversation and quote.