If you employ workers in Australia, changes to the minimum wage may affect your business, whether you pay award wages or not. 

Latest news about minimum wage 

The minimum wage in Australia will increase by 5.2 per cent from July 1st, 2022. This is good news for workers across the country who have been struggling to make ends meet on the current minimum wage, particularly in light of dramatically increased food, energy and fuel costs.

The new minimum wage for workers who do not work under an award is $21.38 per hour, or $812.60 for a full-time working week (before tax). This is a jump from $20.33 per hour. 

Meanwhile, award minimum wages will be increased 4.6%, with a minimum rise of $40 a week. Award minimum wages who earn above $869.60 per week will get a 4.6% rise, while those earning less will receive a $40 increase. 

These changes will help to ensure that workers are able to live a more comfortable life and provide for their families. The increase is marginally above inflation but takes into account the expectation that the cost of living will continue to rise in 2022. 

Who earns minimum wage in Australia? 

Only two per cent of workers in Australia earn minimum wage. According to The Conversation, a further 23 per cent receive the minimum award rates. 

The changes will apply to all industries, except for hospitality, aviation and tourism, which are still catching up after the pandemic. Workers in these industries will see their pay increase from October 1st. 

The jobs that pay this rate include cleaning positions, fruit and vegetable ‘pickers’, hospitality dishwashers, laundry workers and some retail assistants. If you employ people in Australia, it’s worth being aware that the minimum wage applies to all workers over the age of 21. Workers on supported wage systems, apprentices and trainees may also be paid below this rate. Outside of these categories, it is illegal to pay less than minimum wage. 

It is interesting to note that many workers are liaising with their unions to negotiate collective wage increases to accommodate the rising cost of living. Teachers in NSW are one example; they have gone on strike throughout the first half of the year to demand higher pay. 

Managing pay raises

While the change to the minimum wage in Australia is good news for workers, it does create challenges for employers. 

The new minimum wage will need to be factored into business costs, and this may mean that some businesses have to increase prices or cut back on other areas in order to make ends meet. 

As an employer, you may experience pressure from your team to increase wages, even if people are earning above the minimum wage. If this is the case, you will need to start thinking about negotiating and figuring out what’s possible. 

Many workers are considering negotiating a pay raise at this time, especially because there is a skills shortage in Australia. It’s a good idea to work with your PEO to put a plan in place that will help you respond to requests. 

Make sure you are compliant

All businesses that operate in Australia are accountable when it comes to paying minimum wage and meeting other payroll requirements. 

It makes sense to work with an Australia-based PEO to ensure you are paying people fairly and correctly. When you liaise with a local provider, you’ll have more confidence around this area of your business. 

Contact APEO to find out more about employing Australian workers in 2022 and beyond.