The Fair Work Commission has announced a 3.75% increase to the National Minimum Wage, effective the first pay period on or after 1 July 2024.
The decision will impact more than 20% of Australian workers that are paid in accordance with the minimum wage rates in one of the 121 Modern Awards.
Employers can prepare by identifying employees who will be affected, amending their pay rates accordingly, and ensuring that their payroll infrastructure and procedures are equipped to implement this update.
New National Minimum Wage rate
- The new weekly minimum wage will be $915.90 (increased from $882.80).
- The new hourly minimum wage rate will be $24.10 (increased form $23.23).
- The minimum rates of pay in each of the 121 Modern Awards will also increase by 3.75%.
In the coming weeks, the Fair Work Commission will vary each of the Modern Awards. This variation will specify the exact dollar figure of the updated minimum wage rates for every job grade within the Modern Award.
The revised National Minimum Wage will be effective from the commencement of the first complete pay period on or following 1 July 2024. Consequently, if your pay cycle begins on a Thursday, the adjusted rates will take effect from Thursday, July 4, 2024.
Superannuation guarantee rate increase
From 1 July 2024, the superannuation guarantee rate will increase from 11% to 11.5%. This is in addition to the increase to the National Minimum Wage.
For employees whose pay structure is based on wages plus superannuation, employers will incur the additional 0.5% increase in costs.
On the other hand, for employees who receive a total remuneration package, the 0.5% hike can absorbed into the total remuneration package, assuming:
- the employment contract permits the adjustment; and
- the employee’s earnings remain at or above the updated National Minimum Wage or the new minimum wage stipulated in the relevant Modern Award.
This adjustment would mean a 0.5% reduction in the wage component and a corresponding 0.5% enhancement in the superannuation contribution, maintaining the overall remuneration unchanged.
Even if you are legally able to pass the superannuation increase cost to employees, it is important to consider the broader implications of that decision on the workforce. This includes any financial strain it would cause staff and the potential impact on morale and retention.
What do employers need to do now?
Employers should take proactive steps to prepare for the upcoming increases. Here are some key actions to consider:
Remuneration review:
- Evaluate your current pay structure and identify employees who will be directly affected by the new minimum wage rates. Ensure that their wages align with the updated rates.
- Calculate the impact of the 0.5% superannuation increase. Consider how this adjustment will affect overall remuneration for employees.
- If you have employees who are covered by a Modern Award, check the rates in the Modern Award Determination to ensure that your calculations are accurate.
Communication:
- Communicate with your workforce about any changes to their pay rates.
- To reduce queries, specify the effective date for both the minimum wage increase and the superannuation adjustment.
Payroll Systems and Processes:
- Ensure that your payroll system is configured to calculate the revised minimum wages and superannuation contributions.
If you have any questions, please don’t hesitate to contact Emily Creak or Joe Mullavey.
| Emily Creak Principal M: 0400 955 183 E: ecreak@pageseager.com.au |
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| Joe Mullavey Principal M: 0416 794 061 E: jmullavey@pageseager.com.au |
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Published: 4 June 2024
