National Minimum Wage Increase of 2.5%

The 1.86 million Australians being paid the National Minimum Wage (NMW) will see an increase of $16 per week or 2.5% in wages due to the Fair Work Commission (FWC) releasing their annual wage review decision on 2 June 2015. The Minimum Wage Panel (the Panel) of the FWC determine any variations to the NMW or modern awards before 1 July each year.

The NMW will increase from $640.90 to $656.90 per week or $16.87 to $17.29 per hour. This is an increase of 42 cents per hour or 2.5%. This is slightly less than the 3% increase made last year.

The most significant reason for a slightly lower increase in wages is because of the reduction in inflation and aggregate wages growth in comparison to those in 2014. These factors were important considerations because they have a direct bearing on living standards. Other matters taken into account by the Panel include:

  • steady growth of the unemployment rate;
  • uncertainty of the timing of a stronger non-mining investment contribution to economic growth;
  • no evidence of corporate stress;
  • having equality in remuneration and promoting social inclusion through increased workforce participation;
  • encouraging collective bargaining; and
  • improvement of relative living standards over the past two years of individuals receiving the NMW or are award reliant.
The modern award minimum wages have also been increased by 2.5% with weekly wages being rounded to the nearest 10 cents.

These changes will come into effect on 1 July 2015.

This increase is less than that requested by union bodies but more than those in the business community.

The Australian Council of Trade Unions asked the FWC in the annual wage review to increase the federal minimum wage by $27 a week to $667.90.

The Australian Industry Group requested a 1.6% increase across the board, being an increase of $10.25. The Australian Chamber of Commerce and Industry had requested the panel to not increase the minimum wage by any more than 0.9%, being $5.70 per week.

What does this mean for employers?

If you pay employees the national minimum wage or a modern award rate, those rates will need to increase from 1 July 2015 to the new minimum set by the FWC.

It also means that for employees entitled to Government-funded paid parental leave, their entitlements will also increase from 1 July 2015 to $656.90 per week, less tax.

See link to the Statement from the FWC here. See link to the full decision here.


Kate Hollings Law Graduate