Increase to the national minimum wage and awards
The Fair Work Commission has announced an increase to the federal minimum wage of 2.5%.
This increase applies only to those who are currently paid at the minimum national wage or under a Modern Award.
The new national minimum wage will be $772.60 (per week) or $20.33 (per hour) which applies to anyone not covered by a Modern Award. This increase will apply from 1 July 2021.
Increases to most Awards will also take effect from 1 July 2021, with some exceptions. The Retail Award will only increase from 1 September 2021 and various other Awards are scheduled to increase from 1 November 2021.
Increase to superannuation guarantee
The super guarantee stipulates the minimum percentage of wages that employers must contribute to superannuation on an employee’s behalf.
The super guarantee is set to increase from 9.5% to 10% on 1 July 2021 and then continue to rise by 0.5% each year until 2025 in line with the Superannuation Guarantee (Administration) Act 1992.
|Year||Year Super Guarantee (%)|
|Year starting on 1 July 2020||9.5|
|Year starting on 1 July 2021||10|
|Year starting on 1 July 2022||10|
|Year starting on 1 July 2023||11|
|Year starting on 1 July 2024||11|
|Year starting on or after 1 July 2025||12|
Can the change in super guarantee be incorporated into existing salaries?
The application of the superannuation increase may differ depending on the particular remuneration package of employees and how their employment contract (if there is one) addresses the remuneration. For example:
- Superannuation inclusive package
In circumstances where a package expressed as a single figure inclusive of super and salary, the employee’s take-home salary may be decreased from 1 July 2021 so that the total remuneration package remains unchanged.
- Salary plus superannuation package
For employment contracts expressed as salary plus super, minimum compulsory employee super contributions will increase and take-home salary cannot be reduced.
Please contact us to discuss how we may assist you and your business adapt to these new changes to minimum wages and superannuation.