June 2024 – LawEnsure

FWC Annual Wage Review 2024-25

On 3 June 2024, the Fair Work Commission (FWC) announced their decision regarding the Annual Wage Review for 2024-25. The FWC has increased both the minimum wage and modern award minimum wage rates by 3.75%. The increased rates are to be applied with effect 1 July 2024.

National Minimum Wage Increase

The National Minimum Wage applies to employees not covered by an award or registered agreement. From 1 July 2024, the National Minimum Wage will be increased to $915.90 per week or $24.10 per hour.

It is an increase of about $33.00 a week to the current minimum wage, and affects about 2.6 million workers — equivalent to 20.7% of the national workforce.

Award Minimum Wage Increase

Following consultation with a range of stakeholders, including peak councils, registered employer/employee organisations, individual employers and employees, and the Australian Commonwealth and State Governments, the FWC decided that employees covered by a modern award (approximately a ¼ of all Australian employees) will have their award based minimum rates increased by 3.75% with effect the first full pay period starting on or after 1 July 2024.

The FWC determined that this level of wage increase was the most that could reasonably be justified in the current economic climate, stating that it was ‘not appropriate’ to increase award wages ‘by any amount significantly above the inflation rate’.

In determining the percentage increase, the FWC took into consideration:

the current rate of inflation;
the performance and competitiveness of the national economy;
the need to achieve gender equality;
promoting social inclusion through increased workforce participation;
cost of living pressures;
relative living standards and the needs of the low paid; and
that modern-award-reliant employees will shortly receive the benefit of the stage 3 tax cuts and the 2024 budget cost-of-living measures, which are projected to increase real household disposable incomes over the next 12 months.

Enterprise Agreement Wage Increase

Employees covered by enterprise agreements that provide for annual wage increases aligned to the FWC Annual Wage Review, will also be entitled to the 3.75% increase with effect 1 July 2024.

Superannuation

The legislated minimum superannuation amount (Super Guarantee) will increase from 11% to 11.5% per annum on 1 July 2024.

New Casual Employment Definition

With effect 26 August 2024 the new definition of ‘casual employee’ is introduced to the Fair Work Act 2009 (Cth) (FW Act), where a casual employee is only a casual if:

there is not a firm advance commitment to continuing and indefinite work, taking into account a number of factors including the real substance, practical reality and true nature of the employment relationship; and
the employee is entitled to receive a casual loading or specific casual pay rate.

The definition expands further to provide indicia of how the employment relationship may be characterised by an absence of a firm advance commitment to continuing and indefinite work, which includes whether:

there is an inability for the employer to elect to offer work or an inability for the employee to elect to accept or reject work (and whether this occurs in practice);
having regard to the nature of the employer’s enterprise, it is reasonably likely that there will be future availability of continuing work in that enterprise of the kind usually performed by the employee;
there are full time employees or part time employees performing the same kind of work in the employer’s enterprise that is usually performed by the employee; and
there is a regular pattern of work for the employee (although this does not have to be ‘absolutely uniform’).

In short, this change means that parties will need to look beyond the written terms of a contract to determine whether an employee is truly a casual and must make an assessment having regard to the ‘real substance, practical reality and true nature of the employment relationship’.

Employees who start as a casual, will stay casual until their employment status changes either through:

a conversion process or FWC order; or
accepting an alternative employment offer and starting work on that basis.

Employees who were employed casually before 26 August 2024 will stay casuals under the new definition unless they transition to permanent employment.

Right to Disconnect

With effect 26 August 2024 (and 25 August 2025 for small businesses) eligible employees gain the ‘right to disconnect’ outside of work hours, which includes emails, calls and text messages from both employers and third parties such as clients and contractors.

Modern awards will contain a new model term by 26 August 2024, with employees set to gain the right to refuse contact outside their working hours unless that refusal is unreasonable.

Several factors must be considered when determining whether an employee’s refusal is unreasonable.

This includes:

the reason for the contact;
whether the employee is compensated for:
- being available in the period when contact is made or attempted; or
- working additional hours outside their ordinary hours of work;
the nature of the employee’s role and level of responsibility; and
the employee’s personal circumstances, including family or caring responsibilities.

Takeaways for employers

The increases to minimum wages will take effect for employers from the first full pay period on or after 1 July 2024. The increases will also have a flow-on effect to all loadings, penalties, allowances and overtime payments under the awards that are calculated with reference to the minimum wage. Employers will soon be able to review these increase on the FWC’s Pay and Conditions Tool website.

Employers should review their current pay arrangements to ensure that:

award/agreement-free employees:any employee not covered by a modern award or enterprise agreement is paid the new minimum weekly wage.
modern award covered employees: from the first full pay period on or after 1 July 2024, employees covered by a modern award are paid the newly prescribed minimum award rates of pay, including casual loading and other loadings, penalties, allowances or overtime, which are calculated by reference to the modern award minimum rates of pay.
all-inclusive salary employees: review salary packages of employees who receive ‘all-inclusive salaries’. The increase may affect the lawfulness of that all-inclusive salary if it is no longer adequate to compensate them for their award entitlements ie to achieve a positive BOOT.
enterprise agreement covered employees: from the first full pay period on or after 1 July 2024, for employees:
- not covered by a modern award – not less than the national minimum wage;
- covered by a modern award – not less than the minimum prescribed rate of pay for the employee’s award classification; and
- engaged under arrangements that guarantee pay above the high-income threshold – must exceed the high-income threshold (currently $162,000, however, will increase with effect 1 July 2024).

Disclaimer: The information contained in this update is intended as a guide only. Professional advice should be sought before applying any of the information to circumstances. While every reasonable care has been taken in the preparation of this update. Law Ensure (ACN 168 990 261) does not accept liability for any errors it may contain.

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