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National Minimum Wage Increase: What This Means For Hospitality

National Minimum Wage Increase: What This Means For Hospitality

On Wednesday, 15 June 2022, the Fair Work Commission announced a minimum wage increase for Australian workers. From 1 July 2022, Australian workers will be entitled to a 5.2% wage increase – equivalent to an extra $40 per week for full-time workers.

But what does this mean for hospitality businesses?

Let’s dive in.

National minimum wage and award minimum wage increases

The Fair Work Commission recently announced that both the national minimum wage and award minimum wage will increase at the start of the new tax year. The decision comes amid surging fuel, food and energy prices in an attempt to ease the financial burden for many Aussie workers. 

National minimum wage increase

The national minimum wage will rise from $20.33 to $21.38 – an increase $40 per week, which equates to a 5.2% pay rise for workers. 

Award minimum wage increase

In Australia, a large number of workers are covered by an award which dictates the minimum pay rates and conditions of employment for specific job roles. As a business owner, it is important to understand which award(s) apply to your employees, so you can offer the correct compensation to your staff.

Award minimum wages will increase by 4.6% and will be subject to a minimum increase of $40 per week based on a 38-hour week for full-time employees.

This means minimum award wages:

  • Above $869.60 per week, will get a 4.6% increase
  • Below $869.60 per week, will get a $40 increase

Affected awards include Hospitality Industry (General) Award, Registered and Licensed Clubs Award and Restaurant Industry Award. A full list of all industry awards can be found here.

When do the changes come into effect?

The new national minimum wage will come into effect from the first full pay period on or after 1 July 2022.

However, the award minimum wage increase will be implemented across two stages. 

Similar to the national minimum wage, the majority of award wages will also increase from the first full pay period on or after 1 July 2022. However, for some award categories, the wage increases will not come into effect until 1 October 2022 – including several hospitality and tourism awards. 

If your business is covered by one of the following awards, then you will not need to implement the new wage increase until the first full pay period on or after 1 October 2022.

Hospitality

  • Hospitality Industry (General) Award
  • Registered and Licensed Clubs Award
  • Restaurant Industry Award

Tourism 

  • Marine Tourism and Charter Vessels Award
  • Alpine Resorts Award

What does this mean for hospitality businesses?

While the minimum wage increase is great news for hospitality workers, the decision has received a mixed response from hospitality owners, who are still reeling from the pandemic. Along with supply chain issues and inflation business owners are worried that the wage increase will add further financial strain for struggling venues. 

The Restaurant and Catering Association has expressed concern for hospitality businesses and the negative impact of the wage increase.

“Whilst we are glad that the Commission agreed with our submission in deferring the implementation of the award rate increase to 1 October, I know a lot of business owners will have limited ability to absorb the extra cost,” says R&CA CEO Belinda Clarke.

“93 per cent of our industry is small business. With everything they have gone through over the past two years with COVID-19, in addition to rising inflation, crippling staff shortages and the cost of doing business, this is sadly going to mean more business closure.”

However, according to Sidekicker, many hospitality businesses have already raised their wages in recent months to attract staff amid the current hospitality labour shortage. 

“Over the past year, as worker shortages have increased competition to secure talent, we’ve seen businesses increasingly offering our Sidekicks – the casual workers on the Sidekicker platform – rates more than 5% above the minimum wage, on average,” said Sidekicker CEO, Thomas Amos.

“In particular, the hospitality and healthcare sectors have increased their casual rates significantly, rising between 15-25% and up to and beyond 30% for certain roles compared to six months ago. Raising the minimum wage will be a welcome relief for workers, but for many businesses who employ temporary and casual workers… the rate rise has already happened.”

Changes to superannuation 

Alongside changes to the national minimum wage and award wages, businesses also need to prepare for the upcoming changes to superannuation payments.

From 1 July 2022:

How can your business prepare? 

While the national minimum wage increase is imminent, hospitality businesses have a little longer to prepare as the awards covering the hospitality industry aren’t due for wage increases until October this year (changes to super will still go ahead on 1 July). 

To help your business prepare:

  • Update your payroll and accounting systems before 1 July so that you continue to pay the right amount of super for your employees.
  • Update your payroll and accounting systems before 1 October to reflect the award wage increases. 
  • Subscribe to email updates from the Fair Work Ombudsman to be notified when the new rates are available in their pay tools.
  • Use the find my award tool to keep up to date with relevant changes.

 

The information contained in this article was correct at the time of writing, June 2022. Please visit the Fair Work Ombudsman website to stay up to date with the latest minimum wage information.

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