The Fair Work Commission (FWC) handed down its Annual Wage Review decision on 3 June 2024. The FWC Expert Panel decided to increase the National Minimum Wage and all modern award rates by 3.75% (the rise last year in award rates was 5.75% and 4.6% the previous year). The FWC Expert Panel noted the function of the review was twofold. Firstly to review and make the national minimum wage order which applied only to persons not covered by a modern award or enterprise agreement. Secondly to review modern award minimum wages and consider whether they should be adjusted. The FWC noted that:
• less than 0.7% of all employees are paid the National Minimum Wage and about 20.7% of all employees are paid at the minimum wage rates in awards;
• many of these employees are female and work part-time and almost half are casual employees;
• they are disproportionately low paid, paid junior rates and employed by small business;
• the wages for this sector constitute less than 11% of the national “wage bill”; and
• last year’s increase in modern award minimum wages accounted for about 15% of wages growth across the entire workforce for the year to March 2024.
The FWC expert panel concluded that the direct effect of the minimum wage increase on wages growth was generally limited but more important for the award reliant sectors of accommodation and food services, health care and social assistance, retail trade and administrative and support services which accounted for over 65% of all modern award reliant employees. In reaching their decision the Fair Work Commission took into account that:
• cost of living pressures for modern award reliant employees;
• modern award minimum wages remain lower than five years ago in real terms, resulting in financial stress;
• it was not appropriate to increase award wages significantly above the inflation rate, mainly because labour productivity was no higher than four years ago;
• the labour market and business profit growth remain strong but the picture is less positive in some award reliant sectors;
• modern award reliant employees would soon receive the benefit of the Stage 3 tax cuts; and
• the forthcoming increase in the superannuation guarantee contribution rate.
The FWC considered an increase of 3.75% to be broadly in line with forecast wages growth across the economy. The FWC will also establish a program to address gender undervaluation issues in certain modern awards. The National Minimum Wage and award rate increases will take effect from the first full pay period on or after 1 July 2024. This means that the federal weekly minimum full time wage will increase from 1 July 2024 from $882.80 per week ($23.23 per hour) to $915.90 per week ($24.10 per hour). There will also be smaller award increases from this date and allowances will also be affected. It is important to check your particular award for commencement of the increase.
A summary and the detailed FWC decision can be found at FWC Annual Wage Review 2023-2024. Employers should check the Fair Work Commission website (www.fwc.gov.au) for pay rate revisions to their particular modern award/s and implementation dates. You can also subscribe to electronic award updates from the Commission. The Fair Work Ombudsman also has online pay checking resources (www.fairwork.gov.au/pay). Remember that employees cannot be paid less than required by an applicable modern award (including overtime, penalty rates and allowances). It is only trainees, apprentices and junior employees, employees to whom training arrangements apply and employees with a disability who may be paid less than these minimum rates and then only if specified in an applicable award or enterprise agreement. For non award employees, the obligation is for employers to ensure that an employee is being paid more than the minimum wage rate for all their hours of work. Care also needs to be taken in relation to annualised wage and common law salary arrangements.
Also, from 1 July 2024, the compulsory employer Superannuation Guarantee rate will increase from 11% to 11.5%. Finally, the unfair dismissal high income threshold (the annual remuneration level, above which award free employees cannot bring unfair dismissal claims) will increase to $175,000 (from $167,500 and excluding superannuation and non guaranteed amounts, eg commission) and the maximum compensation for unfair dismissals will increase to $87,500. Please contact us if you would like any further information or help.