Do I need to put up wages from 1 July 2024?
The Fair Work Commission’s Expert Panel has handed down a 3.75% increase to the National Minimum Wage and for employees across Australia who are covered by a Modern Award.
Many businesses will need to increase pay rates, or at least carefully assess whether they do.
How does this work?
National Minimum Wage
The National Minimum Wage is currently $23.23 per hour, or $882.80 per week (as at 4 June 2024).
The increase will increase the National Minimum Wage to $24.10, or $915.90 (from 1 July 2024).
This means, if you (unusually) pay one or more employees at the National Minimum Wage, for the first pay period on or after 1 July 2024, you must pay those employees at the rate of $24.10 for all hours worked on and after 1 July 2024.
Modern Award
Modern Award base rates vary across the 121 Modern Awards.
Modern Award base rates will increase from 1 July 2024 by 3.75%.
This means, if you pay according to the relevant Modern Award, you must ensure the increase is applied, as applicable, to ordinary time pay entitlements such as industry and other allowances, shift loadings, evening, and weekend penalty rates payable on ordinary time, and the casual loading.
An example of an increase would be: Under the General Retail Industry Award 2020, as at 4 June 2024, a Casual Retail Employee Level 2, is paid $31.61 (inclusive of 25% casual loading) for each ordinary hour. From the first pay period on or after 1 July 2024, that employee will be entitled to be paid at the rate of $32.80 per ordinary hour of work.
‘Over Award’
Do you pay ‘Over Award’? Really? Best to make sure.
The correct understanding of ‘Over Award’ is where you have in place a valid ‘Individual Flexibility Agreement’, or you have in place compliant ‘guarantees of annual earnings’, or you have a compliant ‘Annualised Wage Arrangement’ in place with the employee(s), or lastly, you have in place a contract that pays a satisfactory amount over and above the minimum amount in the Award and includes a ‘set-off clause’.
The incorrect version of ‘Over Award’ is where you simply pay slightly. or even a fair bit, over the minimum hourly rate in the relevant Modern Award. This alone is not a satisfactory approach because if you do not have one of the mechanisms provided for in the point above then you are exposed to pay your contractual rates against the Modern Award rules and multipliers.
The question as to whether you need to increase your ‘Over Award’ payment is likely to be contingent on whether you actually do pay ‘Over Award’ and whether you have the legally appropriate mechanism in place in your contract.
Enterprise Agreement Covered
It is most unlikely that you will have to provide increases to any employees covered by an Enterprise Agreement.
However, if the relevant Enterprise Agreement does provide for increases that are benchmarked or affected by an increase to the National Minimum Wage, then an increase may be required.
Other 1 July 2024 Increases
Superannuation
On 1 July 2024, employers across the country will be required to increase the percentage contribution of the Superannuation Guarantee, to be 11.5% (up from 11% for 1 July 2023 to 30 June 2024).
In addition to the above increase in percentage, these contributions will be increased comparatively by the 3.75% to ordinary hourly rates.
Unfair Dismissal Threshold
The Unfair Dismissal Threshold is currently $167,500 (as at 3 June 2024).
On 1 July of each year, the Unfair Dismissal Threshold is indexed upward by following a particular formula provided for in the regulations. We will keep you posted as to the updates on indexation.
Next Steps for the Fair Work Commission
The Fair Work Commission is proposing, on its own initiative, to commence proceedings to consider whether increases are necessary to ensure that gender pay gaps are addressed, together with any issues arising as to equal remuneration and eliminated gender-based undervaluation.
This process will focus on the following Modern Awards:
Children’s Services Award 2010;
Social, Community, Home Care and Disability Services Industry Award 2010;
Health Professionals and Support Services Award 2020;
Aboriginal and Torres Strait Islander Health Workers and Practitioners and Aboriginal Community Controlled Health Services Award 2020; and
Pharmacy Industry Award 2020.
If you are interested in updates, please join our mailing list HERE.
Having an expert support your audit is vital. Check out RemCheck or contact Joe Murphy.
Joe Murphy wishes to thank Millie Papworth for her contribution to this insight.
This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.