Changes in Minimum Wage and Award

Author:
Carly Stebbing
minimum wage

Fair Work Commission Announces 3.75% Increase to the Minimum Wage and Modern Award Wages, Effective from 1 July 2024

Carly Stebbing and Grace Wu

On 3 June 2024, the Fair Work Commission (FWC) announced its Annual Wage Review decision for 2023-24, setting a modest increase of 3.75% to the National Minimum Wage (NMW) and modern award minimum wages for the next financial year. 

The changes will take effect from the first full pay period on or after 1 July 2024.

Employers must ensure that they comply with their employees’ minimum workplace entitlements, as failing to do so, whether intentionally or not, may attract serious penalties under the Fair Work Act 2009 (the Act). 

National Minimum Wage 

The NMW applies to employees who are not covered by a modern award or registered agreement, also known as award/agreement free employees. It is set to increase by 3.75 per cent. 

The NMW is increasing as follows:

  • $882.80 to $915.90 per week (an increase of $33.10) for full-time employees working a 38 hour week; or 
  • $23.23 to $24.10 per hour (an increase of $0.87) for part-time employees.

The casual loading figure will remain unchanged at 25 per cent. 

Junior, apprentice and trainee NMW rates will also be adjusted proportionately.

Modern Award Minimum Wage 

All modern award minimum wages are set to increase by 3.75 per cent. 

Each modern award sets out the minimum wage rates (and other minimum conditions for employment) for employees working in certain industries and occupations. 

There are currently 121 modern awards in the national industrial relations system which, together, cover around 2.6 million employees or approximately 20.7 per cent of the Australian workforce. 

Reasons for the Decision

The FWC explained that a primary consideration in its decision was the ongoing impact of cost-of-living pressures on employees who live in low-income households and who rely on modern award wages. The FWC also determined that the increase of 3.75% is broadly in line with the forecasted growth of wages across the economy in 2024.

Significant Penalties for Non-Compliance 

Employers who fail to comply with the new minimum wages risk facing significant penalties under the Act. 

In a recent decision in the Federal Court of Australia, the Fair Work Ombudsman secured $4 million in court-ordered penalties against the former operators of popular Taiwanese restaurant chain, ‘Din Tai Fung’, for underpaying and exploiting vulnerable workers. 

For further reading on that decision, please see our article, ‘Casual Employee Rights Australia: Lessons from the Din Tai Fung Case’.

Takeaways for Employers 

Employers must ensure compliance with the new minimum wages, which will take effect from the first full pay period on or after 1 July 2024

This involves reviewing current contracts and payroll arrangements to ensure that: 

  • All employees are being paid at least the national minimum wage; 
  • Modern award-covered employees are paid at least the award minimum wage; and
  • Employees covered by an enterprise agreement are paid the greater of the enterprise agreement rate,  the modern award or national minimum wage, whichever one applies.

Employers must also account for any flow-on effects from an increase to an employee’s pay, such as wage-related and expense-related allowances which must be adjusted accordingly. 

Our Employment Law team have extensive knowledge and expertise on minimum workplace entitlements and Payroll Compliance. For legal advice and immediate support in relation to your obligations as an employer, please submit an enquiry or call us on (02) 8355 9999.

Disclaimer: This is intended as general information only and not to be construed as legal advice. The above information is subject to change. You should seek independent legal advice before embarking upon any course of action.

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