How minimum wages are set
On this page:
- What is Fair Work Australia's role in minimum wage setting?
- The Minimum Wage Panel
- What guides the work of the Minimum Wage Panel?
- The annual wage review process
What is Fair Work Australia's role in minimum wage setting?
Fair Work Australia (FWA) is responsible for setting minimum wages for employees in the national system.
The tribunal is required to conduct an annual wage review and make a national minimum wage order.
The first annual wage review must be completed by 30 June 2010 and the first determination must have effect on 1 July 2010. From 1 July 2009 Fair Work Australia will commence to invite submissions and conduct research for the purpose of the annual wage review to commence on 1 January 2010.
The Minimum Wage Panel
Minimum wage-setting is determined by a Minimum Wage Panel headed by the President of Fair Work Australia and comprising six other Minimum Wage Panel members.
At least three of the members of this panel will be part-time Fair Work Australia members dedicated solely to minimum wage-setting.
The 2010 national minimum wage order must set a rate of pay for employees without coverage of awards or agreements (including a special national minimum wage for employees with disability and a casual loading) and may consider whether to vary rates of pay for employees covered by modern awards or transitional Australian Pay and Classification Scales.
The Minimum Wage Panel may also set a special national minimum wage for trainees, apprentices and juniors though it is not required to until its 2011 Annual Wage Review.
What guides the work of the Minimum Wage Panel?
The Panel's main objective is to establish and maintain a safety net of fair minimum wages. In performing this objective, the Panel must take into account:
- the performance and competitiveness of the national economy, including productivity, business competitiveness and viability, inflation and employment growth, and
- promoting social inclusion through increased workforce participation, and
- relative living standards and the needs of the low paid, and
- the principle of equal remuneration for work of equal or comparable value, and
- providing a comprehensive range of fair minimum wages to junior employees, employees to whom training arrangements apply and employees with a disability.
The annual wage review process
As part of its annual wage review process, the Minimum Wage Panel will:
- review modern award minimum wages and the national minimum wage order, and
- make a national minimum wage order.
In an annual wage review, Fair Work Australia may make one or more determinations to vary, set or revoke modern award minimum wages. The Panel may also adjust transitional Australian Pay and Classification Scales not revoked by the Australian Industrial Relations Commission or FWA as part of the award modernisation process.
In exercising the above two functions, the Minimum Wage Panel must take into account the rate of the national minimum wage it proposes to set as part of the same review.
Annual wage review determinations varying modern awards and National Minimum Wage Orders must come into effect on 1 July in the next financial year after a determination or order is made. A decision varying modern award rates must be published, detailing the rates of the wages varied before the 1 July commencement date.
The legislation allows for investigations and reports for consideration in an annual wage review. All research undertaken for the purposes of an annual wage review, must be published so that submissions can be made on the issues covered in that research.
Fair Work Australia must, in relation to each annual wage review, ensure that all persons and bodies have a reasonable opportunity to make and comment on written submissions for consideration in the review.
The Fair Work Act 2009 requires that all submissions are published unless the person or body making the submission claims it contains information that is confidential or commercially sensitive and Fair Work Australia is satisfied with this claim.
