Minimum wage and superannuation increase 1 July 2024
On Monday 3 June 2024, the Fair Work Commission has announced a 3.75% increase to minimum rates in modern awards, which takes effect from the first full pay period after 1 July 2024. For those employees who are not covered by a modern award or enterprise agreement, and are paid the National Minimum Wage, they will also receive an increase of 3.75%.
The Commission contends that the increase in minimum rates is consistent with forecasted wages growth across the economy and will only make a modest contribution to wages growth.
The Commissioner’s primary driver for the minimum rate increase was cost-of-living pressures on modern-award-reliant employees.
The Commissioner closely considered more substantial minimum rate increases but was deterred by Australia’s slow growth in labour productivity along with other factors including the upcoming implementation of stage 3 tax cuts, the strong labour market and business profit growth across the economy.
The Commission acknowledged that minimum wages, in real terms, will continue to remain lower than they were five years ago.
The effect of the increase will mean that the National Minimum Wage itself will lift $0.87 per hour from $23.23 to $24.10 from the first full pay period on or after 1 July 2024.
For Modern Awards, employers must check the minimum rates of their applicable awards, and where the minimum rate is being paid to employees, ensure that the increase is passed on from the first full pay period after 1 July 2024 to avoid the risk of underpayment. Note that allowances and similar entitlements also need to be reviewed.
It is also essential that employers review pay rates for employees currently receiving over-award payments, or who engaged under enterprise agreements, to ensure that they do not underpay their employees when compared to the revised National Minimum Wage or relevant award rates.
Superannuation
Employers should note that from 1 July 2024 the superannuation guarantee rate will increase from 11.0% to 11.5%.
Employers who pay employees a total remuneration package which is inclusive of superannuation, should seek advice as to whether their contract of employment permits them to absorb the increase in superannuation, or whether they will have to increase the employee’s remuneration package to account for the superannuation increase.
Disclaimer: This content provides general information only, current at the time of production. Any advice in it has been prepared without taking into account your personal circumstances. You should seek professional advice before acting on any material.
