Wage award changes coming to the hospitality industry from October 1
Delayed Hospitality Industry, Registered and Licenced Clubs and Restaurant Industry Awards increases explained by Leanne Robertson
The what? As part of the Fair Work Commission’s (FWC) Annual Wage Review 2021-22, most awards had minimum wage increases came into effect from July 1, 2022.
However, the Hospitality Industry (General) Award 2020, the Registered and Licenced Clubs Award 2020, and the Restaurant Industry Award 2020 were delayed, and these awards will see an increase from October 1, 2022.
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The why?
In recent years, many exceptional circumstances have been considered when determining when the minimum wage increase would apply to all modern awards.
In the 2019-20 Annual Wage Review, the FWC decided that due to the unprecedented impacts of COVID-19 on businesses, the economy, and the community, the award minimum wage increases would be separated into three groups. The three groups were categorised based on industry clusters, and increases were awarded in a staggered approach.
As part of the 2020-21 Annual Review, the FWC reviewed whether these classifications were still relevant and concluded that further to industry clusters, the awards should be reclassified based on the industries’ experiences. As a result, the FWC agreed to delay the increase of 22 awards.
This year, after considering the continued impacts of COVID-19, severe flooding in parts of NSW and QLD, analysis of ABS employment data, and submissions from employer parties, the FWC was satisfied that exceptional circumstances continue to exist and warrant a delayed operative date for modern awards in the hospitality sectors.
The ‘so what?’
Ensuring you are paying your employees the correct rate as per the relevant award can be a difficult task. The annual minimum wage increase is the perfect time to do an annual review of your workforce and ensure that they are being paid in line with the award, rather than simply updating pay rates.
A suggested annual review process is outlined below:
- Review Employees Award Classifications
- Review Employees paid an ‘above award’ hourly rate
- Review Employees Paid an annualised salary
- Apply Wage Increases from the first full pay period starting on or after 1 October 2022
Review Employees Award Classifications
The first step towards ensuring that you are paying employees correctly is to check that you have them classified on the right level under the relevant award.
Remember that classifications are based on the duties the employee performs, rather than their job title. Additionally, it is common that the longer an employee has spent in the business, the more likely that they may be relied upon to do higher duties.
For example, if you have a long-term Food and Beverage Attendant who has transitioned to regularly supervising the team, this may call for an increase from the attendant level classification to the supervisor level classification.
Review Employees Paid an “above award” hourly rate
In order to attract staff, many businesses may offer new employees an hourly rate that is higher than the minimum rate payable under the award.
This may lull the employer into a false sense of security that they are safely paying this employee above the award, however, employers may find that after the many wage increases in the last 18 months, the original rate offered may have fallen below the minimum hourly rate for their classification.
Ensure you include these staff in your annual review process and compare their hourly rate to the minimum award rate and apply increases where necessary.
Review Employees Paid an annualised salary
The Hospitality, Restaurant and Clubs awards provide guidance on minimum salaries that must be paid to salaried employees under these awards.
The Hospitality and Restaurant awards have also had recent changes introduced in regards to Annualised Wage Arrangements in September 2022. After implementing these changes, employers may feel they have done all they are required to do to pay these employees correctly, however, it is important to remember that the salary of these employees must stay at least 25 percent above the minimum wage for their classification.
The Clubs award also allows for the payment of salaries to employees, however, the percentage above minimum requirement varies between 20-50 percent above award depending on the employees’ classification and conditions of the salary arrangement.
As part of the annual review process, make sure you include employees paid a salary under these awards and ensure they are paid at least the minimum salary required.
Apply Wage Increases from the first full pay period starting on or after 1 October 2022
Once you have completed the review process and determined what pay rises are due, it is time to apply the changes in your payroll system. Ensure that this process is undertaken carefully and reviewed thoroughly to ensure no employee is missed in this update. A payroll system that offers features such as automatic award rate increases and bulk applying pay increases can assist in ensuring this process is efficient as well as thorough.
Additionally, make sure you have planned the timing correctly so that you are applying the increase at the right time. Exactly when the new rates apply will depend on your pay cycle. This payment is to be paid from the first full pay period on or after October 1, 2022.
This means that if your last pay cycle in September runs across September and October, the increase is not actually due until the next cycle as it will be the first full pay period on or after 1 October.
Leanne Robertson is a Payroll Implementation and Compliance Specialist at KeyPay
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