The price is (not) right.

Although the recent decision of the Fair Work Commission to raise the national minimum wage has caused controversy, in our experience many employers are oblivious to these changes and fail to pass on the wage increases to their employees as required by the Fair Work Act 2009 (Act).

Update.

In its Annual Wage Review, the Fair Work Commission has decided to raise the national minimum wage by 2.5%.

The new national minimum wage will be $656.90 per week or $17.29.

The increase will affect employees that get their pay rates from the national minimum wage, a modern award and in some cases a registered agreement.

Reactions to the minimum wage increase have been mixed. THE ACTU was seeking a minimum wage increase of $27 per week whereas the Australian Chamber of Commerce and Industry (ACCI) argued that minimum wage should not increase by more than $5.70 per week.

The ACTU said ‘this decision won’t relieve the stress on low income households in the face of increasing healthcare, education and childcare costs’ (http://www.actu.org.au/actu-media/media-releases/2015/lowest-paid-workers-continue-to-do-it-tough-despite-16-pay-rise).

ACCI said:

‘the 2.5 per cent rise risked harming the job prospects of the most vulnerable people in the labour market and could counter federal budget measures to encourage small business investment. The ACCI believes the Fair Work Commission decision sits above the rate of inflation’  (http://acci.asn.au/Research-and-Publications/Media-Centre/Media-Releases-and-Transcripts/Minimum-wage-increase-will-hurt-small-business-and).

Lesson.

Despite the mixed reactions, employers must ensure that they are passing on the minimum wage increases from the first full pay period starting on or after 1 July 2015. Ignorance is not bliss as failing to pass on these increases to your employees can result in you breaching the Act and the terms of a modern award.

Penalties.

A breach of the Act and the terms of a modern award can lead to:

1.  penalties of up to $6,600 for individuals who are involved in a breach, and $33,000 for corporations, per breach;
2. compensation or back pay to employees (plus interest);
3. publication of the breaches which can affect the employer’s reputation; and
4. an audit by the Fair Work Ombudsman in relation to all employee records and employee payments for the past 6 years.

Stay tuned for further developments.