National Minimum Wage and Modern Award rates increase announced

At 10:30 am AEST on the 3rd June 2024, The Fair Work Commission (FWC) handed down the Annual Wage Review 2023-24 decision.

Our key takeaways from the decision include:

1. The decision provides an increase of 3.75% from the first full pay period after 1 July 2024 to both the national minimum wage and all minimum Modern Award rates.
2. The increase considers inflation, labour productivity, strong labour market, and upcoming tax cuts and budget measures.
3. This increase on top of last years increase of 5.75% may still cause significant challenges for some employers.
4. Although the increase does not directly apply to employees covered by an Enterprise Bargaining Agreement, Section 206 of the Fair Work Act, 2009 requires that base rates of pay in Enterprise Bargaining Agreements must not fall below the Award base rate of pay. A 3.75% increase in Award rates may well result in some base rates in Enterprise Bargaining agreements falling to below the Award base rate from 1 July 2024. Employers need to be aware of their obligations in this regard and be undertaking assessments now to avoid underpayments from 1 July 2024.
5. The decision to provide a wage increase took into account that labor productivity had not improved over the past four years, only recently returning to positive growth. Despite this, the increase was considered necessary due to ongoing cost-of-living pressures faced by low-paid workers, although the rise remains modest to align with forecast economic conditions and inflation expectations.

The impact of the FWC wages decision will be different for each employer. However, all employers are encouraged to ensure that they do not inadvertently fall into a situation of underpaying their employees and this includes ensuring ongoing compliance with base rates of pay requirements for Award and Enterprise Bargaining covered employees.

In our experience many employers are unsure if their employees are covered by a Modern Award. Now is the time to take steps to clarify this situation. Modern Award coverage is not something that an employer can avoid or can opt out of. If there is a Modern Award which applies to the employer’s industry or to the occupations of its employees it is highly likely that some, if not all, employees are covered by a Modern Award.

Our HR Consulting division are here to assist employers resolve questions about Modern Award coverage and/or ensuring compliance with minimum obligations for base rates of pay. Of course, Modern Award coverage creates employment obligations for employers other than minimum rates of pay and therefore understanding if your employees are covered by a Modern Award is imperative and should not be delayed.

If you would like to know more about the latest national wage increases or the implications for your business, please contact your usual Exant advisor or alternatively, reach out to one of HR specialists on 07 3218 3900.