Summarise with AI
Merit, award and cost-of-living increases are different things
- Merit increase — discretionary, tied to individual performance or growth
- Award increase — the annual rise to modern award minimum rates, typically from 1 July. Not discretionary
- Cost-of-living adjustment — applied across the board to preserve real wages, unrelated to performance
Conflating them causes trouble. An employer who says "we gave you a rise" when the award minimum moved has not given anything — and employees paid at the minimum generally know that.
It sits on top of the award, not instead of it
Where an employee is award-covered, a merit increase does not displace the minimum. If someone is paid $2 above their classification minimum and that minimum rises by $1.50 on 1 July, their margin is now $0.50 — and if the employer gives no merit increase, they have effectively had a real-terms pay cut relative to their peers.
Run the award increase first, then apply merit on the new base. Doing it the other way round produces figures that fail an award check.
The cost is more than the increase
In shift-based work a base-rate rise multiplies. Penalty rates and overtime are percentages of the base, and superannuation is calculated on ordinary time earnings — so a 3% base increase costs more than 3% for anyone working weekends or overtime.
Model it against an actual roster rather than against annual base salary, or the budget will be short.
Key takeaways
- Merit, award and cost-of-living increases are three different things
- Merit sits on top of the award minimum, never instead of it
- Apply the award increase first, then merit on the new base
- A base rise costs more than its percentage once penalties, overtime and super are counted
Model what a pay rise costs across a roster — including its effect on penalties, overtime and super — before you commit to it.
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