The national minimum wage and all modern award minimum wages will be increased by 3.75 per cent from 1 July 2024. The decision was announced on 3 June 2024, following the Fair Work Commission (FWC) Expert Panel's Annual Wage Review for 2023-24.
Key outcomes
The key outcomes of the 2024 Annual Wage Review are:
- a 3.75 per cent increase will apply to the national minimum wage, which will see:
- the current weekly minimum wage increase from $882.80 to $915.90 (an increase of $33.10)
- the current hourly minimum wage increase from $23.23 to $24.10 (an increase of $0.87 per hour).
- a 3.75 per cent increase will apply to modern award minimum wages across the board
- the current casual loading figure for award or agreement-free employees will remain at 25 per cent.
Reasons
In coming to this decision, the Expert Panel noted that the cost of living pressures facing low income households was a primary consideration in their review.
Despite these pressures, the Expert Panel did not find it necessary to increase award wages significantly above the current inflation rate. They reached this conclusion on the basis that:
- labour productivity remains stagnant in Australia
- some industry sectors with a large portion of award-covered employees continue to experience reduced business profit growth
- many award-covered employees will soon benefit from the Stage 3 tax cuts and cost of living relief introduced under the Government's 2024-2025 Budget.
While the Expert Panel acknowledged that the forthcoming 0.5 per cent increase to the Super Guarantee contribution would reduce take home income and partially offset the 3.75 per cent wage increase, it was satisfied that the wage increase would broadly align with the predicted wage growth for 2024 and the inflation rate, which is forecast to return to below 3 per cent in 2025.
On a separate note, the Expert Panel also reported on the gender equity research project which was undertaken after last year's Annual Wage Review which identified a potential undervaluation of work in the modern award minimum wage rates applying to female-dominated industries and occupations. The research project found that a few female-dominated occupations were highly reliant on an award as the only method of pay setting.
In response to these findings, the Expert Panel announced that the FWC would initiate proceedings to examine and address gender undervaluation in four priority areas. These include:
- early childhood education and care workers
- disability home care workers and other social and community services workers
- dental assistants, medical technicians and psychologists
- pharmacists and other health professionals.
Employees in these four priority areas are covered by the following 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
- Pharmacy Industry Award 2020.
During these proceedings, the FWC will "consider whether the minimum wage rates for the relevant classifications in identified awards should be increased on work value grounds in order to remedy potential gender undervaluation". The FWC has also indicated that it intends to complete these proceedings before next year's Annual Wage Review.
Takeaways for employers
The increases to minimum wages will take effect for employers from the first full pay period on or after 1 July 2024. In anticipation of these changes, employers should review their current pay arrangements to ensure that:
- award/agreement-free employees: Any employee not covered by a modern award or enterprise agreement will, from the first full pay period on or after 1 July 2024, be entitled to a minimum weekly wage for 38 hours of work equal to $915.90, or $24.10 an hour (plus the 25 per cent casual loading in respect of casual employees)
- modern award covered employees: From the first full pay period on or after 1 July 2024, any employees covered by a modern award are paid no less than the new modern award wage in respect of the employee's classification under the modern award. This change also includes casual and other loadings, penalties, allowances or overtime which are calculated by reference to the modern award minimum pay rates. The FWC will hand down further decisions setting out the New Modern Award Wage for each modern award to assist employers
- all-inclusive salary employee: Review salary packages of employees who receive "all-inclusive salaries". The increase may affect the lawfulness of that all-inclusive salary if it is no longer adequate to compensate them for their award entitlements. You also need to bear in mind the increase in the Superannuation Guarantee rate to 11.5 per cent on and from 1 July 2024
- enterprise agreement covered employees: From
the first full pay period on or after 1 July 2024, any employees to
whom an enterprise agreement applies should be paid base rates of
pay under the enterprise agreement that are:
- for employees not covered by a modern award – not less than the national minimum wage
- in the case of an employee covered by a modern award – not less than the wage specified in respect of an employee's classification under a modern award
- employers who intend to guarantee pay above the high-income threshold for certain employees should review whether the annual rate of earnings paid to the relevant employees exceeds the high-income threshold. Employers should note that the high-income threshold will increase on 1 July 2024.
For more information, you can read the full Annual Wage Review Decision 2023-24 here and the announcement of the decision here.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.