Is your payroll set up correctly for the 2024 Award rates?

The national minimum wage across Australia increased on 1 July 2024 by 3.75% to $24.10 per hour or $915.90 per week. In this article, GPHR Director Wendy Jeffery-Lonnie covers what you need to know for the award changes, as well as tips to ensure your payroll is all set up correctly.

After last years 5.75%, this year’s increase of 3.75% factored in lower inflation that 2023, cost of living pressures, Labour productivity remains less than it was 4 years ago and only this year showed an increase, benefit of the 1 July 2024 tax cuts and other budgetary measures impacting real household disposable income the government recently handed down. They also considered the 0.5% increase to superannuation.

In their review the Fair Work Commission looked at the fact that approximately 27% of the Australians who are paid under an Award are employed at the minimum wage rates of those Awards.

They confirmed that the majority of these “Modern Award Reliant employees” are in most instances employed part time or casual, generally women and are generally employed across 4 main industries.

Further to this they determined any decision they make will directly affect about 11% of the Australian workforce – the balance receiving above award wages or those not employed under an award.

In my opinion with the Unions thinking it was far too low and industry leaders thinking it was too much. The Fair Work Commission probably got it about right. – Wendy Jeffery-Lonnie

• If your staff are paid in line with the Award – you will need to ensure your payroll system is set up to take into account the new minimum awards rates. Plus review any allowances or penalty payments in line with the new rates.
• The governments “Closing the Loopholes Bill” now includes the criminalisation of intentional wage underpayments. This means that deliberate failure to review wages resulting in the underpayment of staff will become a criminal offence (penalties and potential jail time).
• If you have non-award staff on salary packages – they will be looking at the minimum rate percentage and thinking that is what they should get too… if you are looking at salary reviews now – this is a factor to consider.
• Penalty rates and allowances outlined in awards that are linked to pay levels will also go up (this includes leave loading). This means that if your employees are currently receiving an ‘over-award’ salary to cover all the additional amounts set out in the awards, the increase may no longer cover the new award levels.

Summary: The minimum wage review for 2024

The national minimum wage across Australia will increase on 1 July 2024 by 3.75% to $24.10 per hour or $915.90 per week.

On top of this is the increase to superannuation from 11% to 11.5%.

The percentage increase to the minimum wage will apply to:

• Employees under a Modern Award (where they currently are being paid above Award wages you will need to triple check this).
• Employees who are not covered by an Award or Agreement (national minimum wage would apply).
• Note the coverage definition of the Miscellaneous Award has been broadened and some staff who were deemed a non-Award employee would now be classified under this Award.

With this decision the Fair Work Commission will be working through their pay tools and information sheets which should be available online in the coming days.

How to ensure compliance from 1 July with new Award rates

1. If you currently pay a salary above minimum Award rates and you are not intending to give pay rises this year, it is a good idea to recheck your employees’ rates against the new minimum Award rates to ensure all your employees continue to be remunerated at or above minimum Award rates.
2. Check your payroll codes for which pay items are flagged as having superannuation paid on them. Normal hours with a 1.5 x penalty rate for working on a Saturday would attract superannuation, overtime hours worked on a Saturday attracting a 1.5 x overtime rate would not.
3. A quick review of your employment conditions and contracts is a quick, easy and inexpensive way to protect your business.
4. If you have any special payment arrangements (eg not paying overtime, leave loading or a certain allowance or penalty because you pay a higher salary) make sure this arrangement is clearly documented. Don’t rely on a verbal agreement or a quick email to protect you from a future wage claim. There have been some recent cases highlighting unclear “offset clauses” in employment contracts or undocumented arrangements, and they have failed to hold up in court.

If you employ ‘vulnerable workers’ you are particularly at risk of additional scrutiny from the Fair Work Commission.
The substantial penalties for breaches of the Award and/or Fair Work Act are multiplied 10-fold.

Unsure where to start with award compliance?

The Fair Work Commission have a range of on-line tools available at www.fairwork.gov.au.

Alternatively, feel free to contact GPHR Director Wendy Jeffery-Lonnie directly on 0411 559 697 with questions about the new award rates, your staff, employment contracts, pay rates or performance issues.