On Monday, 3 June 2024, the Fair Work Commission announced an increase to Australia’s minimum wages for award-free and award-covered employees. This increase of 3.75% will take effect from 1 July 2024

What does this mean for employees?

For award-free employees this means the new minimum wage will be $915.90 per week (based on a 38 hour week) or $24.10 per hour. Casuals are entitled to a 25% loading on the hourly rate. Young award-free employees (those 20 years and under) receive a % of this rate, depending on their age. For award-covered employees, the new minimum wages will be set out in the awards themselves, and the Fair Work Commission will publish “draft determinations” of the new award rates shortly. These will be published on the Fair Work Commission’s website here. The Fair Work Ombudsman will also be updating their Pay Guides for each award in the coming weeks, which can be viewed here.

Only some awards provide for lower rates for young employees, whilst many dictate the same minimum rates apply regardless of the employee’s age.

When do these changes take effect?

What if 1 July 2024 is part way through my pay period?

The changes take effect from the first full pay period on or after the 1 July 2024. This means that if your pay period starts on 1 July, the changes will take effect from that date. If, for example, you pay monthly and your pay period runs from the 15th to 14th of each month, and so the 1 July falls part way through your pay period, the changes won’t take effect until the next full pay period on or after 1 July 2014 (i.e. the one starting on 15 July in this example).

Do I need to increase pay rates if I already pay above the minimum wage?

Generally speaking, where employers are already paying rates that are higher than the new applicable minimum wage, they will not need to increase their rates of pay. If the new minimum wage has overtaken what the employer currently pays staff, then they will of course have to increase their rates to (atleast) match the new minimum wage. In some circumstances employers will guarantee that they will always pay a certain % above the minimum wage, but this is rare.

What are modern awards and how do I know if my employees are covered by one?

Modern awards are industry / occupation specific rules and regulations which amongst other things, dictate the minimum rate that can be paid to employees covered by them. There are different rates depending on the duties, seniority, experience, and qualifications of the employee. There are also different rates depending on when work is performed (i.e there are higher rates for working long hours or at unsociable times). An industry award will generally apply to everyone in that industry, regardless of their role, such as the Hospitality Industry (General) Award. Whereas an occupational award will apply to an employee in a particular industry, regardless of the industry they work. E.g. the Clerks Private Sector Award applies to employees doing administrative work across a wide range of industries. Please note that there can be exceptions to these rules. The majority of employees in Australia are covered by a modern award, so it is likely that most businesses will have some awardcovered employees. If you would like assistance in determining award coverage, our HR Advisory service can help. We know these changes can be overwhelming, but that’s where Employment Hero can help. We automate these changes to your payroll as soon as they come into effect, so you can easily handle any update.

What about employees covered by enterprise agreements?

Enterprise agreements are agreements entered into with the workforce at large, or a defined group of employees, which operate in place of a modern award that would otherwise apply. The increases to modern award rates will impact employers covered by enterprise agreements. The law operates so that employers on enterprise agreements cannot pay a base rate of pay that is lower than the applicable base rate of pay in a modern award. Base rate of pay, means the rate of pay for ordinary hours without penalty rates or loadings added. Frequently, however, enterprise agreements contain additional provisions about wage increases, such as that employees will always be paid a certain % above the award minimum rate that would otherwise apply.

What other changes do I need to be aware of?

All employers will be also affected by the 0.5% increase to the minimum superannuation rates. This comes into effect from 1 July 2024 (increasing the rate of super from 11% to 11.5%). Employees may also want to be aware that there are increases to the contribution caps for those who want to pay additional amounts into their super funds. See the ATO guidance here.