Annual Wage Review Decision 2013–14

The Commission conducts an annual review of the national minimum wage and rates of pay in modern awards, as required by the Fair Work Act 2009 (Fair Work Act). More than 1.5 million employees—around 16 per cent of the workforce—are directly affected by this review.

The Expert Panel for annual wage reviews comprises the President, three other full-time Members and three part-time Members with knowledge or experience relevant to minimum wage setting. The Panel handed down its decision on 4 June 2014, which was to:

  • increase all modern award minimum wages and most transitional instrument wages by 3 per cent
  • set the national minimum wage for award and agreement-free employees at $640.90 per 38-hour week, or $16.87 per hour
  • set a number of special national minimum wages for award and agreement-free employees with a disability and award and agreement-free junior employees, trainees and apprentices, and
  • set the casual loading for award and agreement-free employees at 25 per cent.

In accordance with the Act, determinations varying modern award minimum wages and the national minimum wage order came into operation on 1 July 2014 and took effect from the first full pay period on or after that date.

Submissions

All persons and organisations are given the opportunity to make written submissions for consideration in the review. In conducting the 2013–14 annual wage review the Expert Panel received a range of submissions from:

  • the Australian Government
  • state governments
  • peak employer and employee representative bodies
  • social interest and community-based organisations, and
  • individuals and/or individual employers.

The Panel considered submissions from these parties through a series of consultative processes conducted across the review including:

  • preliminary consultation submissions and conference hearing (February 2014)
  • initial submissions (March and April 2014)
  • submissions in reply (April and May 2014)
  • post-budget responses (May 2014)
  • questions for parties provided to parties at various terms during the review, and
  • final consultation hearings (May 2014).

Research

In addition to a statistical report prepared by Commission staff, the Panel considered two major research reports:

  • Award reliance (PDF)—this report explored the extent and composition of the award-reliant sector. It was prepared for the Commission by the Workplace Research Centre, University of Sydney in collaboration with ORC International.
  • Minimum wages and their role in the process and incentives to bargain (PDF)—this report explored the relationship between minimum rates of pay and over-award/agreement rates of pay. It was prepared for the Commission by the Workplace Research Centre, University of Sydney.

These reports responded to the need for new quantitative and qualitative research about the characteristics of the award reliant workforce and the relationship between minimum wages and the incentive to bargain. This issue was initially identified during the 2009–10 annual wage review as requiring further research. The research reports were discussed with the Minimum Wages Research Group (a group comprised of representatives from Commonwealth and state governments and peak employer and employee representative bodies) prior to publication.

Further research is anticipated to flow from a review initiated by the Expert Panel to set a medium-term research program for annual wage reviews. Involving a consultation process with external parties, the review will ensure that the Panel’s research program remains appropriately focused and addresses gaps in existing research which are of particular relevance to the Panel and parties to annual wage reviews.

Future reviews will also be informed by the Australian Workplace Relations Study (AWRS) being undertaken by the Commission. The AWRS will be an information-rich resource for the Expert Panel that provides linked employee and employer data not presently available from any other sources.

Challenges

The conduct of the annual wage review is a major challenge. The Panel is required to balance a number of legislative objectives in making its decision, and there is often a degree of tension between the economic, social and other considerations which the Panel must take into account.

The need to take into account developments arising out of the Federal Budget also presents a challenge, as the time between the Budget in May and publication of the Panel’s decision in early June is limited and the Expert Panel is required to provide the parties with an opportunity to file supplementary submissions in relation to the Budget, hold consultations and finalise the decision.

The Commission has consistently delivered decisions in time to meet the 1 July operative date required by the Fair Work Act and its Agency KPI. Factors contributing to this success include:

  • immediately after the conclusion of an annual wage review, planning for the next review begins, including setting of timetables and the research program
  • comprehensive consultation to ensure the Expert Panel receives the views of stakeholders on relevant issues
  • management of workflow and resources by Members and Commission staff to meet deadlines including consultation on draft determinations and orders as well as the availability of submissions and correspondence on the Commission’s website, and
  • provision of high quality research to inform the Panel’s work.

Efficiency and innovation

In 2014–15 the Commission is piloting a paperless annual wage review process, as part of our Future Directions initiatives and our commitment to efficiency and innovation. This pilot will be reviewed and evaluated to assist in rolling out paperless procedures to other Commission functions and processes.

Table of contents