Increasing Your Employees’ Pay: What You Need to Know (2023 Update)

Are you an established business? Maybe you’ve been in the business game for a few years or you have a great handful of employees you value.

It may be time to give your employees’ that pay rise. Increasing your employees’ pay can be a key factor in the continued success of your business.

After all, your employees are the most valuable assets your business has.

So, why not show them just how valuable they are?

Read on to find out the ins and outs of pay rises for Australian businesses.

Table of Contents

Ensure you’re Paying your Employees Correctly

As an employer, it is your responsibility to pay your employees correctly.

At a minimum, all employers must pay their employees according to the entitlements set out by the National Employment Standards, Modern Awards and minimum wage rates.

If you aren’t paying your employees according to these standards, fines to your business can apply.

So, let’s make sure your business is paying your employees according to these national standards before diving into the reasons and evidential basis behind pay rises.

Refer to the National Employment Standards

You must ensure that you are paying all employees according to the National Employment Standards, otherwise known as NES.

The NES set out 10 minimum employment entitlements that all employees must receive from their employment. These standards cannot be excluded by any other employment agreements.

The NES entitlements are:

  1. Maximum weekly hours
  2. Flexible working arrangements
  3. Parental leave entitlements
  4. Annual leave entitlements
  5. Personal carer’s leave and compassionate leave entitlements
  6. Community service leave
  7. Public Hlidays
  8. Long serice leave
  9. Notice of termination and redundancy pay
  10. Fair Work Information Statement

Check out “A Guide to NES: The 11 Employment Entitlements” for a comprehensive guide to all employer’s responsibilities under NES.

Check your Modern Award

In Australia, further entitlements such as working conditions and minimum wages are set out in awards. The entitlements found in Awards apply in conjunction with entitlements within the National Employment Standards (NES).

Awards depend on the industry an employee works in, and the specific job they do in that business. It is your responsibility to ensure that you keep up with any changes in industry awards, to ensure that your employees are receiving the appropriate entitlements.

Read more about Modern Awards.

Remember Minimum Wage rises each year

It is important for us to point out that each year, the minimum wage in Australia changes. It is your responsibility to make sure the rates you pay your employees are about these minimum wage thresholds.

As of 1 July 2022, the minimum wage in Australia for employees over 21 years will be lifted. 

It will increase by $40 per week, which amounts to an increase of 5.2%. 

Therefore, the new National Minimum wage will be $812.60 per week or $21.38 per hour.

If your employees are covered by an award, the Fair Work Commission (FWC) has announced that minimum award wages will increase by 4.6%. 

This is subject to a minimum increase for award classifications of $40 per week and based on a 38-hour week for a full-time employee.

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.

Of course, this is a minimum.

Therefore, employers should be wary to ensure that elements such as age, experience and position are accounted for when figuring out what wage is suitable for each and every employee.

The Fair Work Ombudsman (FWO) has created online tools that you can utilise, such as a Pay Calculator, to help you evaluate the correct payments.

We know that calculating employee remuneration can at times be confusing. LawPath can organise a fixed-price quote to speak with an expert employment lawyer to help you navigate through these complexities.

Why do Employers Increase their Employees’ Pay?

The success of any well-established business lies with those behind the business name — your employees. Let’s face it, without dedicated and hard work employees, your business may not be where it is today. The major reasons employers will increase their employee’s pay is:

  • Boost employee morale and improve productivity,
  • Retain the talent your business has and increase loyalty,
  • Inspire innovation,
  • Foster and reward accomplishment.

Increasing your employees’ pay is a sure-fire way to boost the competitiveness of your business.

It’s true. Even the math supports the fact that increasing your employees’ pay improves productivity and the overall competitive nature of your business.

Need a little proof? Check out the proven statistical benefits below.

Statistics on Increasing Your Employees’ Pay

There are so many benefits your business could enjoy by simply increasing your employees’ pay. But, we thought we would let the statistics do the talking.

According to a US study conducted by the Bureau of Labor Statistics, when an employee’s pay is increased, their productivity increases 3x as much as their increase in pay. It’s safe to say the same would be true for Australian businesses! Now what businesses wouldn’t want that?

Furthermore, ensuring your employees are well compensated for their time and hard work means they are more likely to stay on in the long term. So, you won’t have to worry as much about the costs associated with employee turnovers and training.

Best Practices for Increasing Your Employees’ Pay

There are a lot of elements you must consider when deciding to give your employee that pay rise. We’ve outlined what you should be considering to make sure you are applying the best possible practices when it comes to increasing your employees’ pay. Accordingly, you should:

  • Be transparent with your employees about your business budget,
  • Be transparent about the reasons behind their pay rise,
  • Look to your business competitiors and scope out what they are doing to remain ahead of the game,
  • Keep your raises consistent.

Keep your employees in the loop when it comes to your decisions concerning pay rises. By looking at these 4 elements, you should be able to make a well-informed decision about when a pay rise should be offered, and how much should be offered.

Key Takeaways

Increasing your employees’ pay is a great way to increase the competitiveness of your business.

This is because increases in pay foster and develop employee productivity and increase employee morale.

Who wouldn’t want that? Before you decide to give your employees a pay rise, make sure you are paying them correctly in the first place.

Talk to your employees, be transparent about your intentions to increase their pay and keep your raises consistent.

If you need help understanding employee pay requirements, why not hire a lawyer to learn more. 

Find the perfect lawyer to help your business today!

Get a fixed-fee quote from Australia's largest lawyer marketplace.

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