Annual Wage Review 2023-24

BY OWEN WEBB

On 3 June 2024, the Fair Work Commission Annual Wage Review Panel (Panel) handed down their decision in the 2023-24 Annual Wage Review. In this article we look at the increase that was awarded, the impact for hotels and what preparation is required to ensure that hotels are compliant with the changes.

Modern Award Wages

The Panel decided to increase the National Minimum Wage and all modern award minimum wage rates by 3.75% effective from the first full pay period commencing on or after 1 July 2024.

The effect of the 2023-24 Annual Wage Review decision is that for those employees employed pursuant to Modern awards in the hotel and retail sector such as the Hospitality Industry (General) Award 2020 (HIGA), Restaurant Industry Award 2020 (RIA) and General Retail Industry Award 2020 (GRIA), base rates of pay will increase by 3.75%.

The minimum wage increases from $882.80 per week, calculated based on a week of 38 ordinary hours, or $23.23 per hour, to $915.90 per week or $24.10 per hour, effective from the first full pay period on or after 1 July 2024.

To put the increase into context as an example, the rate of pay for any work performed between 7:00am to 7:00pm Monday to Friday for a casual food and beverage attendant wage level 3 classification under the Hospitality Industry (General) Award 2020 will increase from $31.09 per hr (inclusive of 25% casual loading) to $32.25 per hr.

Considerations

The Panel as part of the Annual Wage Review process received submissions from various interested parties including state and federal governments, unions and employer associations.

The Australian Council of Trade Unions proposed a 5% increase to minimum and award wages, plus at least an additional 4% in award rates for selected occupations, particularly in care and degree-qualified work as part of a gender pay equity measure. The Australian Chamber of Commerce and Industry supported an increase in minimum and modern award wages of up to 2% (plus the legislated 0.5% Superannuation Guarantee increase in 2024).

In determining the level of the increase, the Panel stated that “… a primary consideration has been the cost-of living pressures that modern-award-reliant employees, particularly those who are low paid and live in low-income households, continue to experience notwithstanding that inflation is considerably lower than it was at the time of last year’s Review.1 ” The Panel also noted that it was not appropriate to increase awardwages by an amount significantly above the inflation rate because “ … labour productivity is no higher than it was four years ago and productivity growth has only recently returned to positive territory.2 ” In awarding the increase the Panel also took into consideration that labour market conditions and business profit growth was less positive in those industry sectors that were heavily award reliant and that employees would soon receive the benefit of the Stage 3 tax cuts and other Budget cost of living measures3

Endnotes

1 Fair Work Commission, Annual Wage Review 2023-2024 Announcement of Decision, para 12

2 Ibid, para 12

3 Ibid, para 12

Wage Schedules

The AHA|SA has prepared new wage schedules reflecting the Panel’s changes to award rates of pay. The schedules are available to download from the Workplace Relations Tab on the AHA|SA website. Wage schedules are available for the following Awards:

• Hospitality Industry (General) Award 2020

• Restaurant Industry Award 2020

• General Retail Industry Award 2020

• Registered & Licensed Clubs Award 2020

A more detailed Wage Rate and Allowances Guide for the Hospitality Industry (General) Award 2020 and the General Retail industry Award 2020 has been developed and is also available on the AHA|SA website.

Enterprise Agreements

Those members who have an Enterprise Agreement in place will be affected if the wages in their agreement are less than the minimum rates in the relevant modern award as at the first full pay period commencing on or after the 1 July 2024.

In accordance with section 206(1) of the Fair Work Act 2009 (Cth) the base rate of pay under an enterprise agreement must not be less than the base rate of 3 pay that would be payable to the employee under the modern award if the modern award applied.

Salary Arrangements

Members will need to review any salary arrangements for Award or Enterprise Agreement covered employees and which have been calculated in accordance with an applicable Award or Enterprise Agreement to ensure the salary is sufficient in line with the relevant Award or Enterprise Agreement provisions.

Annualised Wage Arrangements(Clause 24 of HIGA, Clause 20 of RIA)

Members need to ensure that they review the salary of an employee who is paid pursuant to clause 24 of the HIGA – Annualised Wage Arrangements or clause 20 of the RIA. An employee who is paid under an Annualised Wage Arrangement under either of these Awards must be paid at least 25% more than the minimum wages prescribed in the relevant Award for the work being performed. Accordingly, such employees’ salaries need to be reviewed to ensure that they are at least 25% more than the new minimum wage prescribed the relevant Award for the wage level applicable to the employee’s position effective from the first full pay period on or after 1 July 2024.

Salaries Absorption (Managerial Staff Hotels)) (Clause 25 of HIGA)

Members need to ensure that for any managerial employees who are paid a salary in accordance with clause 25 of the HIGA – Salaries Absorption, the salary needs to be at least 125% of the minimum annual salary in clause 18.2 of the HIGA – Managerial staff (Hotels).

Salaries Above Minimum Award Obligations

Whilst clause 24 and clause 25 of the HIGA (and clause 20 of the RIA) place obligations on employers to ensure that their employees are paid at least the minimum salary in those respective clauses, some members will be paying salaries that are well above the minimum salary obligations in these clauses.

If an employee is paid a salary well above the employer’s minimum salary obligations under clause 24 and clause 25 of the HIGA or clause 20 of the RIA, the employer does not have to increase the employee’s salary by the percentage increase awarded in the Annual Wage Review, provided the employer is still meeting the minimum salary obligations under these clauses.

Individual Flexibility Arrangement (IFA)

If an Individual Flexibility Arrangement (IFA) is in place between an employee and their employer in accordance with a Modern Award or an Enterprise Agreement, members will need to review the IFA to ascertain whether any increase to the modern award wages affects the IFA. Remembering that an IFA must result in the employee being better off overall at the time the IFA is made than if the IFA had not been made.

Payroll Providers

Hotels that use an external payroll provider should communicate with their provider to ensure that the new rates effective from the first full pay period on or after 1 July 2024 are loaded into the payroll system.

Award Or Enterprise Agreement Free Employees

Members should refer to the Contract of Employment to determine whether the wage or salary of an Award or Enterprise Agreement free employee needs to be reviewed at this time, and if that review needs to be conducted in line with the decision of the Fair Work Commission. If the contract is silent on a wage review, then it will be up to the employer and the employee to determine when (and if) the wage or salary is reviewed and if any increase is awarded.

Superannuation Changes From 1 July 2024

The Superannuation Guarantee percentage rate payable to employees will also increase by 0.5% on 1 July 2024 to 11.5%. The new rate will be applicable from 1 July 2024, not the first full pay period on or after 1 July 2024.