Increased Minimum Standard for Remuneration and Minimum Award Wages in South Australia, effective 1 July 2020

The South Australian Employment Tribunal (the Tribunal) has recently delivered its second decision in the 2020 State Wage Case. This decision follows from its earlier State Wage Case decision in September last year and a decision of the Full Court of the Supreme Court of South Australia in Treasurer for the State of South Australia and Anor v United Trades Labour Council (Trading as SA Unions) [2020] SASCFC 42 (the Full Court Decision).

After publication of the Tribunal’s reasons in the first State Wage Case, the parties were invited to consider and reach agreement on the various declarations and orders to be made in the second State Wage Case. Having reached such agreement, the Tribunal made the following declarations and orders.

With retrospective effect, from 1 July 2020, the Minimum Standard for Remuneration (MSR) in South Australia increased to $767.50 per week (or $20.20 per hour). This is an increase of 1.75% from the previous MSR. The MSR applies to all employers and employees subject to the terms of the Fair Work Act 1994 (SA) (FW Act) and prevails over contracts of employment and existing award conditions to the extent that the terms of the MSR are more favourable to an employee.

The State Minimum Award Wage was also increased with retrospective effect to $767.50, whilst existing adult award wages were increased by 1.75% from 1 July 2020, respectively. These increases apply to South Australian public sector and local government employees whose remuneration is governed by various awards.

Employers should also note that there are different rates of pay for juniors, apprentices, trainees and people with disabilities, all of which will increase commensurately.

The 1.75% increase is a more modest increase than the previous two increases of 3.0% in 2018-2019 and 3.5% in 2017-2018. The key driver behind this smaller increase in minimum wages is the effects of the COVID-19 pandemic on the State economy. Consideration was also given to the effect of the COVID-19 pandemic on the national and global economy, which in turn impacts South Australia as, being a small market economy, national and international developments have a significant bearing on local economic conditions.

The Full Court Decision concerned the lawfulness of the Tribunal in awarding an increase commensurate to that of the increase in minimum award rates, to the maximum amount of recreational leave loading payable to certain public sector employees. The Full Court determined that the Tribunal did not have the power to award such an increase and decided to remit the matter to the Tribunal. The Full Court decision was a relevant consideration in the second 2020 State Wage Case decision. However, that particular issue as to whether certain allowances in State awards can also be increased by 1.75% could not be agreed by the parties before the Tribunal delivered its second State Wage Case decision. Accordingly, no declarations or orders were made in relation to these “work related allowances” and submissions are to be heard and determined at a later date.

Impact for employers

South Australian public sector and local government employers should ensure that any award covered employees have been paid at least their applicable new minimum wage rate from the first full pay period on or after 1 July 2020.

Failure to pay at least the applicable minimum wage rate can attract orders for compensation, as well as additional monetary penalties for employers.

Importantly, this information applies to public sector and local government employment in South Australia. However, it is worth noting that the State Wage Case decision discussed within this article adopted the 1.75% increase to the National Minimum Wage and minimum wage rates set out in all modern awards applied by the Fair Work Commission in its 2019-20 Annual Wage Review decision.

For more specific information on any of the material contained in this article please contact Sathish Dasan on +61 8 8210 1253 or sdasan@normans.com.au, Ganesh Krishnan on +61 8 8217 1395 or gkrishnan@normans.com.au or Anastasia Gravas on +61 8 8217 1331 or agravas@normans.com.au.