“Exceptional circumstances”: 2.5% minimum wage increase will be delayed for certain industries

The Fair Work Commission has announced a 2.5% increase to the national minimum wage, and other related award minimums.

This means employees on the minimum wage will need to be paid at least $20.33 per hour. That equates to $772.60 per week for full-time employees, based on a 38-hour week.

The change will mean an additional $18.80 paid to full-time employees, per week.

There will also be a casual loading of 25%, and the minimum award will apply to casual employees with a disability, whose productivity is not affected.

The 2.5% increase will also apply to wages provisions for casual junior employees and to the apprenticeships.

The changes apply from the first full pay period on or after July 1, 2021. However, employers in many industries have been granted a delay.

“Exceptional circumstances” 

The FWC deemed there are “exceptional circumstances” justifying a delay to the change for certain industries hit hardest by the COVID-19 pandemic.

For the accommodation and food services sector, with the exception of the Fast Food Industry Award, the changes will come into effect from November 1, 2021.

The same date applies for the Aviation and Tourism Award, the Fitness Industry Award, the Hair and Beauty Industry Award, and various awards covering the entertainment and events industry.

While the FWC also conceded that challenges still remain in the retail sector, the decision suggests they do not warrant such a long delay in implementation.

Instead, changes to the General Retail Industry Award 2020 will come into effect on September 1, 2021. 

In the decision, Justice Iain Ross noted that the economy performed better than expected in the second half of 2020, driven by strong household spending and high demand.

However, he also said the various government support mechanisms and the JobKeeper wage subsidy scheme made the real economic impact of the pandemic more difficult to measure.

Even so, he noted that there was a “broad consensus” in submissions to the review that “the current performance of the economy has exceeded expectations and that the economic recovery was well underway”.

The decision follows a 1.75% minimum wage increase for fast food and retail workers, which came into effect on February 1 this year.

That change was originally set to come into effect in July 2020, but was delayed because of the COVID-19 pandemic, and its effect on hospitality and retail businesses.

In the decision Justice Ross acknowledged that businesses covered by the Fast Food Industry Award 2010 will now face two minimum wage increases within the space of six months.

However, “these businesses also had the benefit of no minimum increase in minimum wages between 1 July 2020 and 1 February 2021,” he said.

The timing issue was also deemed “not sufficient to warrant a finding of exceptional circumstances”.

The increase falls short of the 3.5% minimum wage increase demanded by some economists.

But, in an article for SmartCompany penned last week, Council of Small Business Organisations (COSBOA) interim chief Alexi Boyd and chair-elect Matthew Addison argued such a jump would not work for small businesses.

This feels particularly pertinent in Victoria, where thousands of businesses are still reeling from the latest snap lockdown due to a COVID-19 outbreak.

“Businesses want to remain open and want to provide certainty about employment to their workers, but the vulnerable environment triggered by responses to the COVID-19 pandemic creates insecurity in that employing environment,” Boyd and Addison wrote.

They urged the Fair Work Commission to support a stable employment regime through minimal award increases, suggesting some may be forced to let employees go or reduce their shifts, rather than paying more.

Small business owners don’t always behave in ways that economists can predict,” they said.

What do you think of the 2.5% minimum wage increase? Let us know in the comments.