What to expect from the Annual Wage Review
Each year, the Fair Work Commission (‘FWC’) undertakes the important task of reviewing and adjusting the minimum wage rates for modern awards and the national minimum wage.
The Annual Wage Review is legislative process required by the Fair Work Act 2009 (‘FW Act’).
The minimum wage is crucial for ensuring pay equity. These adjustments are particularly impactful for small to medium-sized businesses, which may need to modify their operations and staffing to align with their financial plans.
In this article, we explore the methods used to determine minimum rates and discuss potential trends for the upcoming Annual Wage Review.
In June 2024, the FWC will hand down their 15th decision with any changes likely to have effect from 1 July 2024.
Minimum wage history
Australia has had a minimum wage since 1907, and it has been the key function of the FWC, and its predecessor national workplace relations tribunals, to set the minimum wage for award covered and award-free employees throughout this time.
Determining the minimum wage
The Annual Wage Review is determined through a process involving the convening of an Expert Panel. The Expert Panel includes the FWC President, three full-time FWC Members, and three part-time members, that review written submissions from various stakeholders, including businesses, government entities, and industry groups.
Additionally, the Expert Panel holds consultations and reviews research it has commissioned.
The determination of the minimum wage rates and the national minimum wage is guided by the minimum wages objective of the FW Act, which considers several factors:
- The performance and competitiveness of the national economy, including aspects such as productivity, business competitiveness and viability, inflation, and employment growth;
- The promotion of social inclusion by fostering increased workforce participation;
- The living standards and needs of the low-paid;
- The principle of equal pay for work of equal or comparable value;
- The establishment of a comprehensive set of fair minimum wages for junior employees, those engaged in training arrangements, and employees with disabilities.
These considerations help ensure the wage settings are balanced and responsive to both economic conditions and social needs.
What to expect from the 2023-24 review
Importantly, features of the Federal Budget are key indicators of performance and competitiveness of the national economy.It is also important to consider in past years, we have not always seen a uniform increase, with some industries and some levels within industries seeing greater increases. With recent development in the Work Values Case – Aged Care Industry, where higher increases have already been determined as being necessary outside of the findings of Annual Wage Review, it is possible increases will again not be uniform across all industries this year.
What happens next
Over the past few years the decision has been published between the last week in May and the first two weeks in June. The decision, once made, will likely have an effect from the first full pay period on or after 1 July 2024.
Should this occur, it is important to note if your normal pay run begin weekly on a Monday, then it will take effect on 1 July 2024.
How can Business Chamber Queensland help?
Business Chamber Queensland members with HR services* as part of their membership can contact the Workplace Advisory Services team:
P: 1300 731 988
Businesses who do not have a HR membership may also seek assistance however a competitive consultancy fee will apply.
For membership enquiries, please contact our membership team on 1300 731 988.
* HR services are included in Business Essentials and Business Evolve memberships