Fair Work Australia has announced the decision in relation to the 2010 Annual Wage Review.

The decision increases the federal minimum wage by $26.00 per week or $0.68 cents per hour for permanent employees. The Decision also adds a similar amount to each of the wage scales contained in Modern Awards. The decision adds $0.85 per hour to most adult casual rates of pay.

The Decision has effect from the first full pay period on or after 1 July 2010.

This is the first decision under the Fair Work Act 2009 and is definitely at the higher end of expectations . The Decision must be considered in conjunction with the transitional or phasing in provisions that also commence in relation to Modern Awards for the first time on 1 July 2010.

The transitional arrangements between the old and the Modern Award system are extremely complex and the Guidance Note issued  two days ago by the Fair Work Ombudsman is already subject to a number of applications to Fair Work Australia to clarify certain elements. This means that it is likely that businesses will not know with any certainty what the arrangements are when they commence on 1 July 2010.

Whilst this is a very undesirable situation to be in, it has been the case for many employers since the new laws commenced because Fair Work Australia has been finding its way as it goes along since July 2009 when the Fair Work Act 2009 commenced.

The decision flows on the increase proportionally to junior employees and also employees not covered by awards. However, some differences apply to the casual loading for non-award employees because this has been phased in in accordance with the phasing provisions in the Modern Awards.

Each business that is operating under the award system needs to review their circumstances on an individual basis because, the phasing rules will have a different effect depending on which award they are covered by and what their current remuneration arrangements are. There is no one size fits all outcome under these new rules.

For businesses that are operating under existing approved Enterprise Agreements, you need to review your Agreement to ensure that the minimum wages in your agreement are at least at the level provided for in the Modern Award.