Fair Work Commission Wage Decision 2023
The Fair Work Commission has just handed down the 2023 wage decision, increasing the national minimum wage and base rates of pay in modern awards. Tom Earls from Fair Work Lawyers provides a summary of the decision. The ACA will update relevant Award pay rates as soon as possible.
For a summary of the Wage Decision, see the Fair Work Commission summary.
Wage increase
The Fair Work Commission has determined that modern award rates will increase by 5.75%.
In addition, there is a substantial increase to the national minimum wage.
Firstly, the nexus between the minimum rate in many awards (known as the C14 rate) and the minimum wage will be broken. The national minimum wage will now be aligned to the C13 rate. Additionally, after that increase, the minimum wage will be increased by 5.75%.
The Fair Work Commission has not published the actual rates yet but our preliminary calculation is that the national minimum wage will be $23.23 (an approximate 8.6% increase on the current minimum).
The decision does not expressly deal with how allowances will change. In previous years, skill and disability allowances were increased by the same percentage and expense-related allowances by the applicable CPI measure. We anticipate this will be the same but are unable to confirm this.
Operational date
The Commission has decided that this year’s increase will apply from the first full pay period on or after 1 July 2023.
Who does this affect?
This decision affects all employees who a modern award applies to. If you have award-based employees who are paid above award rates, the ‘absorption’ principle means that you do not have to increase above-award payments unless the new award minimum is higher than the employee’s current rate, in which case you must pay at least the new minimum.
Employers who have enterprise agreements in place (including pre-Fair Work Act 2009 documents) will need to ensure that the base rate of pay is at least equal to the new minimum. This requirement only applies to the base rate of pay and does not extend to allowances, penalty rates or loadings.
NB: even if an agreement has expired, it remains in force until it is replaced by a new one or the Commission terminates the agreement. This applies to most pre-Fair Work Act 2009 agreements.
Need more information
The ACA will update relevant Award pay rates as soon as possible.