Minimum Wages Changes from 1st July

The Fair Work Commission has just announced its increase to minimum wages, which will become effective from the first full pay period on or after 1 July 2024.

After last year’s 5.75% increase, this year’s increase of 3.75% factored in lower inflation than 2023, cost-of-living pressures, labour productivity remaining less than it was four years ago, and only this year showed a small increase, the benefit of the upcoming 1 July 2024 tax cuts, and other budgetary measures impacting real household disposable income the government recently handed down. They also considered the 0.5% increase in superannuation.

In their review, the Fair Work Commission examined the fact that approximately 27% of Australians who are paid under an Award are employed at the minimum wage rates of those Awards.

They confirmed that the majority of these “Modern Award Reliant employees” are generally employed part-time or casually, are generally women, and are generally employed across only four key industries.

Further, they determined that any decision they make will directly affect about 11% of the Australian workforce—the balance receiving above-award wages or those not employed under an award.

A few things to consider:

If your staff are paid in line with the Award, you must ensure your payroll system is set up to consider the new minimum award rates. You should also review any allowances or penalty payments in line with the new rates.
Penalty rates and allowances outlined in awards linked to pay levels will also increase (including leave loading). This means that the increase may no longer cover the new award levels if your employees currently receive an ‘over-award’ salary to cover all the additional amounts set out in the awards.
If you have non-award staff on salary packages – they will be looking at the minimum rate percentage and thinking that is what they should get, too… if you are looking at salary reviews now – this is a factor to consider.
The government’s “Closing the Loopholes Bill” now criminalises intentional wage underpayments. This means that deliberate failure to review wages resulting in staff underpayment will become a criminal offence (with penalties and potential jail time).

Minimum wage review for 2024

The national minimum wage across Australia will increase on 1 July 2024 by 3.75% to $24.10 per hour or $915.90 per week.

On top of this is the increase in superannuation from 11% to 11.5%.

The percentage increase to the minimum wage will apply to:

For employees under a Modern Award (where they are currently being paid above Award wages, you will need to triple-check this),
Employees not covered by an Award or Agreement (national minimum wage would apply).
Note that the coverage definition of the Miscellaneous Award has been broadened, and some staff deemed non-Award employees would now be classified under this Award.

With this decision, the Fair Work Commission will work through its pay tools and information sheets, which should be available online in the coming days.

Paying your staff above Award wages does not preclude you from the provisions of the Award, except in certain circumstances and only when documented carefully.

If you are unsure whether your staff are Award employees, check now. The penalties for breaching Award or Fair Work Act provisions are substantial.

How to ensure compliance from 1 July with new Award rates

If you currently pay a salary above minimum Award rates and you do not intend to give pay raises this year, it is a good idea to recheck your employees’ rates against the new minimum Award rates to ensure all your employees continue to be remunerated at or above minimum Award rates.
If you have any special payment arrangements (e.g. not paying overtime, leave loading or a specific allowance or penalty because you pay a higher salary), make sure this arrangement is documented. Don’t rely on a verbal agreement or a quick email to protect you from a future wage claim. Some recent cases have highlighted unclear “offset clauses” in employment contracts or undocumented arrangements and failed to hold up in court.
Reviewing your employment conditions and contracts is a quick, easy and inexpensive way to protect your business.
Check your payroll codes for which pay items are flagged as having superannuation paid on them. Regular hours with a 1.5 x penalty rate for working on a Saturday would attract superannuation, while overtime hours worked on a Saturday would not attract a 1.5 x overtime rate.

Unsure where to start with award compliance?

The Fair Work Commission has a range of online tools available at www.fairwork.gov.au.