Each year, the Fair Work Commission gathers to weigh the national minimum wage against factors like rising inflation, wage growth and shifting employee demographics. After some debate and financial magic, the result is an hourly wage increase that takes effect 1 July.

This year, the minimum wage will rise by 2.5 per cent, bringing the total to $656.90 per week, up from $640.90. It’s been dubbed as ‘modest’, and this year’s increase is the lowest percentage in 10 years.

This small increment might seem like a drop in the ocean, but for business it means updating your payroll to make sure your workers are getting their fair share. Here’s a quick guide to determine if you need to revamp your workers’ pay checks.

If you pay under an award system …

The national minimum wage for award-system employees will increase by 2.5 per cent, but review the relevant modern awards for each classification of employees covered by your business.

If you pay under an employee collective agreement …

Look back at your employee agreement to see if it includes anything about wage increases. You need to ensure that you are complying with any obligations listed there. However, keep in mind that regardless of what an agreement says, you must still match your wage rates to ensure that employees receive at least the adjusted federal minimum wage.

If you pay under an enterprise system …

The same conditions apply here as for employee collective agreements. No modern award system applies, but wage increases must match or exceed those coming 1 July.

If you have employees not covered by an award system or an agreement …

Wages must rise to meet the federal minimum wage. 

If you have part-time or casual employees …

A part-time employee is anyone who works under 38 hours per week. They are entitled to the same minimum wage increases as full-time employees. Casual employees are entitled to a higher hourly pay rate than full-time or part-time employees working the same job, because they don’t receive other benefits like paid sick leave. The rate increase will change based on what awards system you work under, so check here for a complete list.

If you have junior, trainee or apprentice employees …

First, you will have to divide your apprentice and junior workers into two age groups: the over 21s, which include some apprentice workers; and those under 21, which encompass high-school-based apprentices and junior employees. Apprentice pay rates depend on the length of the apprenticeship and how much training the apprentice has completed, so check here for entitlements.

Some changes to expect in the upcoming financial year aren’t limited to rates of pay. For example, a 20-year-old employee will receive the full percentage of adult pay starting 1 July, instead of 95 per cent. Junior employees usually get paid a percentage of the relevant adult pay, but check out this handy pay calculator to double check the adjusted amount.

Trainee employees operate a little differently. An employee can’t be paid trainee rates simply because they are new to a job or being trained in a new task. It is determined instead by how many hours the employee is working, whether they have an approved traineeship contract and whether they have to attend work-related education events. Once you’ve determined that, the same award-system/non award-system rules apply. 

If you have employees with disabilities …

The Supported Wage System applies here, but only when outlined in an award or registered agreement. Under this system, an employee with a disability can be paid a percentage of the appropriate minimum wage. This is calculated based on their work capacity. For example, an employee with an assessed work capacity of 70 per cent will get 70 per cent of the minimum wage. Employees cannot be paid less than $80 per week, so stay above that figure.

If there are no SWS provisions in an award or employee agreement, then the worker is entitled to the full pay rate for their classification. If the employee’s disability doesn’t affect their job performance, they are also entitled to the full pay rate.

If you don’t comply …

There are consequences for not updating employee wages to meet the minimum federal standards. Not big ones, but consequences nonetheless. Any business that doesn’t comply is liable to be investigated by the Fair Work Commission. The cost of getting it right is low compared to what you could pay if accused of non-compliance.