On 3 June 2024, the Fair Work Commission handed down its 2024 Annual Wage Review Decision.
Annual Wage Review Decision
The key elements of the decision are:
- the national minimum wage will increase by 3.75% from $23.23 to $24.10 per hour from 1 July 20241; and
- a 3.75% increase will apply to full-time minimum wage rates in modern awards.
Allowances will be increased in line with the formulas in awards.
The increases in modern awards commence from 1 July 2024.
If you are paying an employee above the new minimum rate for their classification in the applicable award, you are not required to adjust those rates unless you have agreed otherwise (e.g. in an enterprise agreement). However, if you have an enterprise agreement containing rates below the new award base rates, under the Fair Work Act 2009 (Cth) (FW Act) you are required to pay at least the award rates.
Wage outcomes and trends
The national wage price index (WPI) shows that rates of pay (excluding bonuses) for all wage and salary workers across all industries in the private sector increased by 0.8% in the March 2024 quarter and 4.1% in the year to March in trend terms.2
Data on enterprise agreement wage outcomes for the December 2023 quarter3, shows an average annual wage increase of 3.8% for private sector agreements and 5.2% for public sector agreements.
High income threshold
The high income threshold, which limits an employee’s eligibility to pursue an unfair dismissal claim (unless they are award or agreement covered), will also increase from $167,500 to $175,000 for dismissals that take effect from 1 July 2024.4
The same figure is used for guarantees of annual earnings. An employer may provide such a guarantee to an employee whose earnings exceed this amount, and the effect is that an award which would otherwise apply to that employee does not apply. However, that employee remains covered by the award for the purposes of the unfair dismissal provisions.
The maximum compensation which can be awarded for unfair dismissal, which the FW Act stipulates is 6 months’ pay (capped at half the high income threshold) will also rise from 1 July 2022 from $83,750 to $87,500.5
It is important to remember that high income earners still have access to other avenues to challenge a dismissal including the general protections provisions in the FW Act, anti-discrimination legislation and the common law (e.g. breach of contract claims).
Superannuation Guarantee Contributions
The Superannuation Guarantee (SG) rate will increase from 1 July 2024 from 11% to 11.5% and continues to increase annually until it reaches 12% on 1 July 2025.
| Income year | SG rate |
|---|---|
| 2023-24 | 11% |
| 2024-25 | 11.5% |
| 2025-26 and onwards | 12% |
Other threshold changes
Tax Free Threshold for Genuine Redundancy6 — base amount and service amount
There are automatic tax free amounts calculated according to a formula which specifies:
- a base amount; and
- an additional amount multiplied by years of completed service.
| Income year | Base amount | Service amount |
|---|---|---|
| 2024-25 | $12,524 | $6,264 |
| 2023-24 | $11,985 | $5,994 |
ETP cap
The ETP cap threshold will increase from $235,000 to $245,000 from 1 July 2024. The whole of income cap remains at $180,000 as this is a non-indexed figure.
Maximum quarterly superannuation contribution base
In accordance with section 9 of the Superannuation Guarantee (Administration) Act 1992, the maximum quarterly superannuation contribution base is indexed in line with AWOTE each income year. The new indexed amount is generally available each February.
| Income year | Per quarter |
|---|---|
| 2024-25 | $65,070 |
| 2023-24 | $62,270 |
Contact us
If you have any questions about how any of the above impacts your business or you would like assistance with your remuneration and/or enterprise bargaining strategy, please contact a member of our Workplace Relations team.
References
1. $915.90 per week for a full-time employee working 38 hours per week.
2. Source: ABS, Wage Price Index, Australia, Cat no 6345.0, Mar 2024. More information is available at www.abs.gov.au
3. The full report can be accessed at www.employment.gov.au/trends-federal-enterprise-bargaining
4. Note: This calculation is based on the application of the formula at Regulation 2.13 of the Fair Work Regulations 2009 and has not been officially released by the Fair Work Commission. Therefore, confirm it is correct by checking the Fair Work Commission’s website after the figure has been officially released.
5. See note at footnote 5.
6. Only applicable if employee is under the age of 65.
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