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The Fair Work Commission's Annual Wage Review results are in... let's take a look
Welcome to a new financial year. We hope your EOFY went smoothly with little to no issues.
For many NFPs, the start of a new financial year is full of excitement. From setting a new budget to establishing your goals and objectives, there are always a lot of positive elements to focus on.
One key focal point that NFPs need to address at this time of year is the Fair Work Commission’s Annual Wage Review.
These changes come into play on the first full pay period following July 1, so it’s essential to be on top of them. Let’s take a look at the Annual Wage Review and what has been announced for the 23-24 Financial Year.
Conducted by a panel of commission experts
What is the Annual Wage Review? It is a requirement within the Fair Work Act 2009 (Cth) (FW Act) that states that each year, the Fair Work Commission must review wages for employees who work within the national workplace relations system.
They consider and review wages for employees both covered by awards or enterprise agreements and employees who are not, while also considering the impact of current circumstances. After this process, the Commission will issue an order that informs of any changes made.
The panel of experts who make these decisions (made up of the Fair Work Commission President, three elected full-time members of the Commission and three more part-time Commission members) are responsible for meeting each year, typically from March through June, to conduct a review of the national minimum wage levels and other minimum wages pertaining to areas like industry awards.
This panel takes into account a range of social, financial and environmental factors to support the end decision, such as:
- Economic situations
- Costs of living and inflation
- Australian workforce productivity and,
- Submissions from interested parties
These factors help the panel make the best judgement possible, using as broad a scope as possible. Many NFP organisations make a submission themselves to this expert panel if their organisational purpose aligns with advocating for low-paid workers.
Regardless of the end result, reviewing these factors allows the panel to have a more comprehensive understanding of the current landscape, in turn allowing them to make a fair determination.
Key notes and factors from the review
In this year’s wage review, the panel made interesting notes regarding inflation and cost of living increases that factored into their end decisions, noting “While inflation has been stronger and more persistent than forecast, the Panel concluded that there was no evidence in Australia of a wage-price spiral despite a very tight labour market. Increases in award minimum wage rates have only had a modest impact on the Wage Price Index (WPI).”
Further, it was noted that “a range of indicators point to a slowing of economic activity since the start of this year. This includes falling retail sales volumes, a decline in new dwelling investment, and deteriorating business conditions and consumer sentiment.”
Gender equality issues were mentioned too, with the Commission making reference to what it believes to be “significant issues concerning the potential gender undervaluation of work in modern award minimum wage rates applying to female-dominated industries and occupations.”
The Commission then went on to announce its intention to conduct research into identifying the occupations and industries where there is potential pay inequality between genders, which will be factored into future considerations and determinations of such issues.
What awards and wage changes have been made this financial year?
The panel have acknowledged that this was a particularly challenging review to conduct, particularly due to factors like high inflation and low unemployment. They have made several key changes that NFP organisations must be aware of.
These include:
- The national minimum wage increases by 8.6%
- The minimum wage for award workers increasing by 5.75%
Casual loading rates for employees who aren’t covered by an award or agreement weren’t addressed in this year’s wage review and will remain at the current casual loading figure of 25%.
The panel’s decision to increase the minimum wage might not sound like much, however, it’s crucial to note this is actually the highest minimum wage increase in decades. Employment Minister, Tony Burke, was quoted as welcoming it as “the best decision for workers we’ve ever had”.
A positive move for Australian workers
This is a significant increase – one that is great news for workers. We’re glad to see the relevant mechanisms have recognised and responded to the difficulties many are facing right now, with high cost of living, inflation and interest rates still an issue. It’s comforting to know workers are not slipping through the cracks, even throughout these challenges.
The difficulties that come from the Fair Work Commission’s decision will largely impact organisations, which will need to raise their revenue to match the increase in wages. This could be a challenging hurdle for NFP organisations that aren’t government-funded.
We encourage those organisations to explore any additional revenue streams they could implement this year to diversify revenue and mitigate any gaps in the budget.
Another major upside to this is for those in NSW. The NSW government has committed to increasing their funding for grants at the same rate, which is amazing news for NFP organisations. This is a welcome but pretty unusual move from the NSW government – it will certainly be interesting to see if the other states follow suit.
What do you need to do?
All employers will now need to review their current pay arrangements so they can ensure they’re making the necessary adjustments and reflecting them within the FY24 budgets.
Get hold of the new payscales for your Award and implement them for the first pay period in July.
That date has passed already, but if you’re not up to date with the Award increases, now is the time to apply the new rates and process a back pay.
Make sure your payroll has been updated to ensure any employees not covered by an award or an agreement will receive the minimum wage increase from July 1 for 38-hour work weeks at a total pay equal or more than $882.20.
Additionally, you will need to ensure all Superannuation Guarantees have been updated in line with the increase to 11%, effective as of July 1 as well.
Need some extra support?
If you’re feeling stuck with any of the required changes resulting from the Annual Wage Review, EOFY tips or accounting and audit support, we have a range of additional resources to guide you.
EOFY:
NFP director responsibilities for EOFY
Audits:
How to have an easy audit season in 2023
How to choose a not for profit auditor
Accounting:
Our top tips to planning your budget for the upcoming financial year
