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The Fair Work Commission has increased the National Minimum Wage and Award Rates for Australia’s lowest paid workers by 3 per cent.

The increase applies to all employees that get their pay rates from the national minimum wage, a modern award or in some cases a registered agreement.

The new national minimum wage will be $640.90 per week or $16.87 per hour. The national minimum wage applies to employees who aren’t covered by an award or agreement.

Most employees are covered by a modern award. If you’re not sure which award applies to you and you are a Better HR subscriber please contact our HR Advice Team of if you are not subscriber you can find the best subscription for your business here.

Fair Work Commission president Justice Iain Ross said there had recently been almost no growth in the real value of award wages, while other employees had enjoyed substantial pay increases.

“The deterioration in the relative living standards of award-reliant workers; the needs of the low-paid; the recent widespread improvement in labor productivity growth; the historically low levels of real unit labor costs; and the absence, in aggregate, of cost pressures from the labour market are all factors favouring a real increase in minimum wages,” he said.

One moderating factor was the superannuation rate increase to apply from July 1.

The ACTU had been pushing for a weekly rise of $27 but employers said they would not be able to afford an increase of anything more than $8.50 a week.

Unions are worried the widening gap between the minimum wage and average earnings means Australia could go down the same path as the US and create a class of “working poor”.

The Federal Government had urged the commission to consider that Australians would be netting an extra $550 a year once the carbon tax was abolished.

Last year the minimum wage rose by $15.80.

Watch the Annual Wage Review 2013-14 Decision

What happens next?

The Fair Work Commission will issue draft determinations and orders about how this decision affects each modern award. We will update our systems to reflect any changes to ensure subscribers have quick and easy access to the most up to date information in plain English. We will also keep subscribers informed about any changes via our regular email alerts, blog and newsletter articles.

Better HR subscribers can also ask questions about pay rates and other commonly asked HR questions.

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