How Often Is An Employee Entitled To A Pay Rise?
How pay raises affect your business and when they should be implemented
Pay raises are a two-way street, employees want them and generally, employers don’t. However, a middle ground exists, as skill levels rise so does an employee’s right to a pay rise. This comes with the benefit of a high-quality pool of employees for the business. Depending on what contract or award covers you will determine how often you can claim a pay rise. There is always the constant of the yearly minimum wage rise. However, other avenues exist such as rising to a new level in a modern award or clauses in a contract.
1. Minimum wage rise
The national minimum wage is currently at $18.93 per hour or $719.20 for a 38 hour week. The minimum wage increases yearly as well due to inflation. If the employee is a casual employee then they will also get the casual loading of 25% on top of the minimum wage.
Numbers and examples
The $18.93 does not apply for junior employees. An employee under 16 will receive 36.8% of the $18.93 which is $6.96 per hour. An employee however who is 20 will receive $18.49 an hour in 2018. This means as the employee approaches 21 they will have a pay rise but once they reach 21 it stagnates. A similar system exists for apprentices, a first-year apprentice is entitled to 55% of the standard rate while a four-year apprentice is entitled to 95% of the standard rate.
2. Contract clause
One of the most common agreements between an employer and an employee is an enterprise agreement. The enterprise agreement may have a clause in it which allows for a yearly pay rise. The contract may also be renewed yearly with some leeway for bargaining.
3. Modern award wage
Modern awards cover a variety of professions, they set out the pay based on certain industries and the level of qualification attained. The process is that as an employee reaches a higher level of qualification then their pay will increase as does their responsibilities. In some industries, the base rate is higher than the minimum wage. This occurs in the Fast Food Industry award where a level 1 full/part time adult gets $20.79/hour. Modern award wages take into account the minimum wage so each year there will be a slight difference to make up for inflation.
In the Fitness Industry Award 2010 a level 2 employee who is full time or part-time receives $19.47 per hour for weekdays. This employee would have done over 456 hours of work at level 1, be a swimming teacher and have duties which don’t require direct supervision. In contrast, A level 5 will receive $25.34 an hour and they will have a Fitness Industry AQF Diploma. They will usually be employed as a fitness specialist.
Ultimately whether or not an employee is entitled to a pay rise depends on the job and the type of employment e.g part-time or casual. Modern award wages give room for promotion and improvement as employees can progress up the ladder. Likewise, as juniors approach the age of 21 they get closer to receiving the full minimum wage. Employees on contracts may have clauses that allow for negotiating or pay rises.
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Justin is a legal intern at Lawpath as part of the content team. He is currently studying a Bachelor of Laws and a Bachelor of Economics at UTS.