As of Monday 1 July, the national minimum wage will increase by 3%.

The  decision, handed down by the Fair Work Commission (FWC) on 30 May will affect 2.2  million Australian employees (21% of the Australian workforce) who have their pay set by a modern award or the  national minimum wage.

The weekly minimum wage, which is currently $719.20, will increase to $740.78 per week,  while the hourly minimum wage will increase from  $18.93 to $19.49 per hour.

All modern award minimum wages will increase by 3%, while the current loadings for all casual employees will remain at 25%.

This year’s  minimum wage increase is lower than the 3.5% increase last year.

President of  the FWC Justice Iain Ross said the decision to award a lower increase was  justified because of the recent fall in GDP growth and a drop in inflation.

“We have  decided to award a lower increase this year than that awarded last year,” Justice Ross said.

“We are satisfied the level of increase we have decided upon will not lead to any adverse inflationary outcome and nor will it have any  measurable negative impact on employment.

“However, such increases will mean an improvement in the real wages of employees who are  reliant on minimum wages and an improvement in  their living standards,” he said.

For employees covered by modern awards, the minimum wage increase will affect all loadings, penalties, allowances and overtime payments they are entitled to. The FWC will be handing down further determinations of each of the new modern award minimum rates in the coming weeks.

If any of  your employees are affected by the minimum wage increase, you should check  their current pay arrangements to ensure that from the first full pay period on or after 1 July they will be paid in accordance with the new minimum wage rates.

This may also apply if you pay an all-inclusive salary, as it may no longer be adequate  compensation for the employee’s new entitlements under the award.

The FWC decision can be found here.