The 2023-24 Wage Review Decision was announced by the Fair Work Commission on 3 June 2024. It is crucial that all employers carefully review the wages and salaries of their employees to ensure compliance with the new minimum standards.

The Fair Work Commission (‘FWC’) has an obligation to establish and maintain fair minimum wages. Congruent with this duty, it must conduct an annual review of minimum wages, considering a range of different factors including inflation and the cost of living. 

There are two aspects to the minimum wage. The national minimum wage (‘NMW’) applies to a small number of employees that are entitled to the national employment standards, but are not covered by a Modern Award or registered enterprise agreement. Comparatively, approximately 20.7% of employees are paid in accordance with a Modern Award. Modern Awards mandate minimum wages to be paid to employees in specific roles and industries. 

The Annual Wage Review 2023-24 decision was announced in June determined that from 1 July 2024, the NMW and all Modern Award minimum wages will increase by 3.75%. This coincides with an increase to the Superannuation Guarantee percentage from 11% to 11.5% on the same date.

The new NMW will be $24.10 per hour or $915.90 per week. There are a few exceptions that allow certain persons to be paid less than this amount. Different minimum wages apply to people under 21, people with a disability, and people subject to training arrangements. Employers should carefully consider whether a Modern Award is applicable to an employee, prior to paying the NMW.

The increased rate must be applied to wages and salaries of employees from the first full pay cycle that starts on or after 1 July 2024. For example, if your weekly pay period starts on Wednesday, the new rates will apply from Wednesday 3 July 2024.

Employers should carefully review their employees’ existing rates of pay and make any necessary adjustments to their payroll. This involves updating wage calculations, tax withholdings, superannuation contributions, and any other relevant payroll components affected by the increase. 

Employers paying employees on salaried positions must also carefully consider the minimum wage increase. It is crucial to ensure that employees paid by salary are better off overall than they would be, if paid the minimum wage. This evaluation should consider any additional entitlements owed to the employee, such as overtime, penalty rates, and all other allowances.

Employers paying employees a salary should carefully consider any annualised salary provisions under the relevant award to ensure that all obligations are being met, including any obligations to inform employees of the method by which their salary has been calculated.

Non-compliance with minimum wage requirements may result in legal disputes, penalties, fines and substantial reputational damage. Employers should seek legal and accounting advice if uncertain about their obligations or require assistance in implementing necessary changes.

If you have any questions on employment matters please reach out to Robert Lamb or John Davies on 07 3220 1144, robert@hillhouse.com.au, or john@hillhouse.com.au.