A key factor in determining business budgets for the new financial year is determining what your payroll costs will look like for the coming twelve months. This year, we are in the fortunate position of receiving an early announcement from the Fair Work Commission as to their decision on the annual Minimum Wage Review.
There are a number of considerations for the Fair Work Commission when it comes to conducting the annual review and these include the relative living standards, the needs of the low paid, workforce participation and the performance and competitiveness of the national economy. They have also factored in the impact of the forthcoming tax cuts and the benefit they will deliver to take home pay.
Minimum wage review
There are two parts to the minimum wage review:
- The FWC deciding on increases to modern awards which covers approximately 20.6% of the Australian workforce and,
- The FWC determining the increase to the National Minimum Wage which sets a minimum rate of pay for employees in the national industrial relations system who are not covered by a modern award or an enterprise agreement and represents about 0.7% of Australian employees.
This year, the FWC determined that both Modern Awards and the National Minimum Wage would be increased by 3.75% effective from 1 July 2024.
Superannuation Guarantee Reminder
While we are talking about changes that kick in from 1 July, employers need to remember that the minimum superannuation guarantee increases to 11.5% up from 11% as well.
What does this all mean for you?
If you are currently paying anyone at the minimum entitlement under their Award, must apply the increase from 1st July (first pay cycle after this date).
If you currently pay above the Award, you must ensure that the current rate of pay remains at, or higher than, the new relevant Award rate of pay.
The new national minimum wage will be $915.90 per week or $24.10 per hour.
If you are operating under an EBA you must ensure that your rates of pay are at least equal to the new Award rates (irrespective of having an EBA in place, rates cannot be lower than those contained in the relevant award).
If you have Individual Flexibility Agreements in place, you will need to review these arrangements ensuring employees remain “better off overall” when compared to the newly increased Modern Award rates.
If you pay any of your employees under annualised salary arrangements you will need to conduct an audit of those annualised salaries against the new Award rates and working patterns to ensure the annual salary compensates adequately for the increased award entitlements.
As always, the HR Staff n’ Stuff team is here to help if you have any questions about these changes or how they apply to your business.
