Important Updates for Businesses Starting 1 July 2024
Important Updates for Businesses Starting 1 July 2024

Earlier today, the Fair Work Commission’s expert wage panel increased the National Minimum Wage and all rates in Modern Awards by 3.75%, commencing the first full pay period on or after 1 July 2024.  This increase in minimum wages will coincide with the legislated rise in minimum superannuation contributions, increasing to 11.5%, on 1 July 2024.

These increases in employee costs and the critical action businesses should be taking now are discussed further below together with potential increased consequences for failing to implement the increases correctly.

Wage Increase: 1 July 2024

Following the decision of the Fair Work Commission this morning, the National Minimum Wage and the minimum rates of pay in Modern Awards will increase by 3.75% from the first full pay period on or after 1 July 2024.

This decision increases the National Minimum Wage from $882.80 to $915.90 a week, or from $23.23 to $24.10 per hour.

In making this decision, the Commission considered the cost-of-living pressures on Award-covered employees and the Stage 3 tax cuts.  It also considered the 0.5% increase to the Superannuation Guarantee to be borne by businesses.

Superannuation Guarantee

The amount of superannuation businesses are required to contribute to their worker’s fund under superannuation guarantee legislation is also set to increase in the new financial year.

From 1 July 2024, businesses will be required to contribute 11.5% of their workers’ ordinary time earnings to their superannuation funds.  This is part of the staggered increase of superannuation to the target rate of 12% to be achieved on 1 July 2025.   

Businesses are reminded that superannuation contributions are paid on ordinary time earnings, and as with previous yearly increases, the businesses’ position on whether this is (or indeed can be) absorbed as part of a previously negotiated salary package needs to be assessed.  If you are unsure about your business’s next steps, please contact the Holman Webb Lawyers Workplace Relations team for advice specific to your business.

Federal Civil Penalty Units Increased

From 1 July 2024, the Federal Civil Penalty Unit will increase from $313 to $330 per unit.  Accordingly, the maximum civil penalties that may be imposed for breaches of the Fair Work Act 2009 (Cth) will rise from $93,900 to $99,000 for corporations and from $18,780 to $19,800 for individuals. You should note that a failure to pay the new increased rate of pay may also result in increased penalties, as failing to pay the increased rate of pay will constitute a breach of the applicable Award and thus contravening the Fair Work Act.

Next Steps

Award Covered Employees & Annualised Salaries

Now is the time for businesses to review the annualised salaries of Award covered employees to:

1.     Ensure any annual salary paid is sufficient to cover the minimum rates under the applicable Award based on the hours the employee worked.  For example, if there was an estimated 10 hours of overtime each month in the annual salary, did the employee work more than 10 hours per month? (Noting this assessment should ideally be done quarterly); and

2.     Ensure the proposed annual salary is sufficient to cover the new minimum rates of pay in the applicable Award and increased superannuation.  This will include reassessing the overtime factored into the salary and any allowances, penalties, loadings, and other applicable Award entitlements, such as annual leave loading.

Businesses are reminded that for Award-covered employees, it is not enough to rely on the set-off clause in the employment contract.  An assessment must ensure that the amounts paid are sufficient to enable the business to ‘set off’ all amounts paid against entitlements under the Award.  If there is a negative discrepancy between the amounts paid to the employee as a salary and the entitlement in the Award, the business should rectify those amounts as soon as possible. 

Award Covered & National Minimum Wage Employees (not annualised)

·       current pay rates for award-covered employees and those paid the National Minimum Wage and ensure they are above the minimum rates commencing 1 July 2024.

·       employment contracts for superannuation guarantee contributions.

If you are unsure of your obligations, feel free to contact the Holman Webb Lawyers Workplace Relations team for advice specific to your business.

Finally, if you have any questions about how these increases apply and how they will impact your business, please contact Workplace Relations Partner Alicia Mataere, who can assist you.


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