Annual Wage Review decision is in

The Fair Work Commission’s Expert Panel has handed down this year’s Annual Wage Review decision which will see the federal minimum wage and award rates increase by 3.75% from 1 July 2024.  

The decision notes that impending tax cuts and the increase in the superannuation guarantee charge were moderating factors but also acknowledged that:  “Modern award minimum wages remain, in real terms, lower than they were five years ago, notwithstanding last year’s increase of 5.75 per cent, and employee households reliant on award wages are undergoing financial stress as a result.”

Balancing that, the decision also noted that: “we consider that it is not appropriate at this time to increase award wages by any amount significantly above the inflation rate, principally because labour productivity is no higher than it was four years ago and productivity growth has only recently returned to positive territory”.

More to come?

For some industries – those which predominantly employ women – there will be more to come.

We have already had significant wage increases of up to 28% in aged care and there is currently a review being undertaken in relation to nurses and midwives.

In today’s decision, there is a commitment to doing more in this space as per the following statement:

“Modern awards and classifications applicable to early childhood education and care workers, disability home care workers and other social and community services workers, dental assistants, medical technicians, psychologists, other health professionals and pharmacists will be the subject of Commission-initiated proceedings to examine and address gender undervaluation. These proceedings will commence shortly after the issue of this decision and we intend that they will be completed by the time of next year’s Review, which will then move on to the consideration of other gender undervaluation issues.”

You need to review all employees’ wages to verify that they remain above award when the minimum and award wage increases take effect on 1 July 2024.

If employees are paid sufficiently above award, the increases can be fully absorbed against over-award payments unless there is an enterprise agreement or employment contract that says otherwise.

If you are paying people on an annualised salary or a flat weekly wage, you need to review that to verify that, when you take into account all of the payments that would apply to an employee under the relevant award and based on the hours that they work, the employee is still better off overall on the salary of wage than they would be under award conditions.

Some awards have specific rules ion annualising wages or default provisions which [provide for a certain margin above award offsetting other award conditions. Check the relevant award for your workers to see if any of these apply. 

Don’t forget that the superannuation guarantee charge is increasing by another 0.5% from 1 July 2024 taking it to 11.5% of ordinary time earnings.

Finally, it always an opportune time to review your employment contracts when these annual wage reviews occur. That is even more true this year with all of the changes to the Fair Work Act and modern awards that have been occurring of late.

We can assist you in all of these areas.

If you would like to learn more about ways that we can do this, please call us on 1300 108 488 or email us at enquiries@ridgelinehr.com.au.