News

Annual Wage Review 2023-2024

The Annual Wage Review was released (03 JUNE 2024) by a Fair Work Commission expert panel. The decision affects both the national minimum wage and minimum rates of pay under modern awards. We have crafted the below for your general information including with specific paragraph references from the full decision which you can access via the following link:

https://www.fwc.gov.au/documents/resources/2024fwcfb3500.pdf

Decision

The national minimum wage and modern award minimum rates of pay will increase by 3.75%:

Announcement of Decision (Annual Wage Review 2023-2024): https://www.fwc.gov.au/documents/resources/annual-wage-review-2023-24-decision-announcement.pdf

When is the increase effective?

01 JULY 2024.

Context and coverage

For the most part, the decision applies to employees covered by the modern award framework. This comprises 120 modern awards that set out minimum terms and conditions of employment including minimum rates of pay across industries. Coverage is estimated at approximately 20% of the workforce ([29]). It is noted that the modern award system applies to employees who are ‘disproportionately casual, part time, low paid and predominantly female’ ([30], [147]).

In making the Annual Wage Review (AWR), the Fair Work Commission is required to consider the following factors [11]:

The full decision contains some very interesting data and factual information in relation to each of the above broad categories. This material may be very useful to HR Leaders and/or CEOs who may be preparing summaries for their board of directors or for a Nominations and Remuneration (People and Governance) board sub committee. For ease of reference, an inclusive list of key paragraphs is set out below so that you can save time and go directly to them as you may need them:

SCHADS, Nursing and Health Professional employees (including Psychologists)

Clients of CPO HR Services include medical, health care and/or housing services providers with staff covered under the following modern awards:

These particular awards apply to staff employed or engaged in the following types of roles:

Going forward, these awards (and their minimum rates of pay) are going to be subject to separate and additional pay review programs listed for hearing.

The Nurses Award for example is currently subject to a separate work value case ([110]). For reasons associated with gender valuation, SCHADS ([119]) and HPSS ([120]) will also be subject to separate rate review initiatives undertaken by the Commission. See also paragraph [179] for the full list of affected Awards.

It may therefore be prudent at this stage for clients engaging team members under these modern awards to also consider building in an additional budget buffer as part of budgetary planning activities. Please contact us directly for further guidance and advice on you can be best prepared: https://www.cpohr.com.au/contact-us/

What HR can do right now?

This is always a busy time of year for HR folk and these are the types of activities that should be on your immediate radar:

  1. Start with brief communication to your workforce regarding the Fair Work Commission decision and that you are considering its implications for the business. This helps ensure that you are on the front foot and in control of correct messaging to your people;
  2. Conduct a comprehensive review of your existing rates of pay against the newly updated applicable Modern Award(s) rates. It is important to identify any gaps from 01 JULY 2024 and to make sure that your minimum rates are at least equivalent to the newly updated Modern Award rates to apply;
  3. Make sure to double check any staff that you may have on above award rates. In my experience, it is amazing how quickly an above award rate can be absorbed by minimum rate increases. As part of your due diligence here, always look at what the team member would be enitltled to not just now but also when they increment to a new minimum rate. It could be that an existing above award rate is fine as at 01 JULY 2024 though a few months later, if the team member is eligible to increment to a new pay point, the new pay point could in fact be greater as a result of the annual wage case decision. So, always look at above award rates both now and into the next incremental step just to make sure you aren’t falling behind. This can also save you a heap of time, effort and administration by avoiding the need to action any back pay;
  4. Prepare a briefing paper for your CEO and/or Board of Directors (or board sub committee). Summarise the key elements of the Annual Wage Review, how it applies to your workforce and any risks that you might have identified. Demonstrate how you are mitigating any such risks – such as by conducting your review, getting on the front foot with any communication and addressing above award rates as part of your sweep through. Consider providing a timeline over the next couple of months of action steps.
  5. Think about whether it might be a good idea for you to also engage an HR Specialist to conduct an additional review of your workings. It can be re-assuring for a CEO and/or Board of Directors to see that there has also been an additional layer of oversight with regard to your minimum rate calculations. We can of course assist you in this regard: https://www.cpohr.com.au/contact-us/

Pro tip: Schedule in a time in the months ahead to re-eyeball your rate calculations once more. Or, alternatively, and at the very least, reciew a sample size of your rate calculations (such as the most common rate or classification that applies to your staffing population). This is good housekeeping (or ‘HR Hygiene’) and best ensures that if you may have made any error in assessing any rate change, you can pick it up sooner rather than later and take corrective action promptly.

Resources and more information

You can access the following from the Fair Work Commission directly which we encourage you to do:

(1). Announcement of Decision (Annual Wage Review 2023-2024): https://www.fwc.gov.au/documents/resources/annual-wage-review-2023-24-decision-announcement.pdf

(2). Annual Wage Review Decision (C204/1): https://www.fwc.gov.au/documents/resources/2024fwcfb3500.pdf

Contact us

If you may need further information and support regarding the Annual Wage Review, then please contact us for immediate guidance and advice. We are at your service: https://www.cpohr.com.au/contact-us/