On 15 June 2022, the Fair Work Commission handed down its annual wage review decision, and with much publicity regarding increases in the cost of living, a 5.2% increase in the minimum wage was implemented. There was also an increase to modern award minimum wages of 4.8%.
While much of the commentary has centred on the effect of minimum wage rises for employers and what is required to ensure they are legally compliant, employees should use the increase as an opportunity to ensure they are getting paid correctly. This applies not just to employees who receive the minimum wage but to any employee who receives wages under an Award, even if they receive above the minimum rate.
The easiest way to ascertain whether there is an underpayment is to compare an employee's minimum or award-covered hourly rate with the rate they receive. If the increases in minimum wages are not reflected in a pay increase, then the employee has been underpaid.
However, employers and employees can often agree to annualised salary arrangements that cover several entitlements, including wages, overtime and penalties. The increase in minimum wages will apply to these entitlements, so a more careful analysis may be required, and inquiries can be made to the Fair Work Ombudsman, JobWatch, or in more complex cases, an employment lawyer.
Employers can underpay employees inadvertently, and these cases can often result in agreements to rectify underpayments with back pay. If there is a dispute, the employee can utilise the relevant authorities, such as the Fair Work Ombudsman, or commence private legal proceedings. These proceedings can seek back pay, interest and penalties, which can be substantial (over $100,000), especially in serious or deliberate cases.
The clear message is to be aware of the minimum entitlements and continue reviewing your arrangement to ensure you are not underpaid.
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