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Payroll

Your Guide to the National Minimum Wage Increase

By QuickBooks Australia

Published on June 4, 2024

The Australian government announced in June that the national minimum wage was to increase from 1 July 2022.

The national minimum wage has increased from $20.33 per hour to $21.38 per hour. This means an extra $40 per week for millions of Australians.

The rise constitutes a 5.2% increase and comes amid the rising cost of living crisis affecting the country.

Awards minimum wages have also increased by 4.6%. Awards are legal documents that set minimum pay rates and employment conditions in various industries covering millions of Australian workers.

So, what does this mean for business owners?

National Minimum Wage increase

The national minimum wage for non-award full-time employees is now $812.44 per 38-hour week.

The 5.2% increase is above the current inflation rate of 5.1%, reflecting an election promise of the Australian Prime Minister, Anthony Albanese, to announce a pay rise in line with inflation.

The Fair Work Commission (FWC), whose expert panel sits every year to review minimum wage, said the increase would affect more than 2.7 million workers.

The increase meant businesses had to begin paying the national minimum wage from the first full pay period after 1 July 2022.

Award minimum wage increase

Modern award minimum wages have increased by 4.6% or $40, whichever is higher.

For example, let’s say an employee works under the Manufacturing Award and earned a weekly wage of $805.40 before 1 July 2022. As that is below $869.60, the employee has since received a $40 increase in their weekly wage.

Alternatively, any employee under the Manufacturing Award who earned more than $869.60 before July now receives a 4.6% increase since that works out as more than $40.

Unlike the national minimum wage increase, the award increase is being rolled out in two stages.

For most awards, the changes came into effect on 1 July 2022, but employees under some awards within the aviation, hospitality and tourism industries had to wait until 1 October 2022.

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What else will change for business owners?

The 2022 national minimum wage increase also affects other payments, such as superannuation payments and penalty rates.

Penalty rates are higher pay rates that come into effect when an employee works on evenings, weekends, or public holidays, often associated with various modern awards.

Employers can use the FWC’s Pay and Conditions Tool to work out penalty rate increases related to the national minimum wage increase.

Superannuation payments are employer contributions to an employee’s retirement fund, they are a percentage of an employee’s wage. Since 1 July 2022, all businesses must now pay super for employees regardless of their wage.

The government removed the $450 per month threshold for super guarantee (SG) eligibility. The government also raised the SG rate from 10.5% to 11.5%, meaning Australians can put aside more money for retirement.

Over the coming years, the minimum superannuation contribution is expected to rise to 12% by 2025.

Keep Up to Date With QuickBooks

Keeping track of payroll changes can be challenging for business owners.

Employers were obliged to pay the increase in the first full pay period after 1 July 2022 meaning that this was a legal requirement that employers had to be aware of.

The FWC meets annually, meaning that business owners must pay attention to updates to ensure they are legally compliant year on year.

However, with Quickbooks Payroll, business owners do not need to spend time making new calculations to update payroll. Instead, this is all done automatically within the system.

As an employer, business owners have enough to worry about keeping employees happy without dissecting the constantly changing obligations regarding pay, especially when it’s never a one-size-fits-all solution for staff. They want to compensate employees fairly without any fuss.

QuickBooks Payroll makes payroll a breeze as we take care of all the math, stay up to date and compliant with the Australian Tax Office (ATO), Single Touch Payroll (STP), and whatever changes come in from the FWC.

Furthermore, we also make it convenient for employees, with easily accessible payslips and forecasting to help them keep track of their earnings.

Check out the Payroll price plans or try our service during a free 30-day trial to see how Payroll can provide assistance and remove the payroll burden for business owners.

FAQs

Does an employer need to pay the minimum wage?

How do employers pay employees not covered under an award?

Does the minimum wage change based on industry?

What is the difference between a salary and a wage?

Are you entitled to a pay rise every year in Australia?

What is the Fair Work Commission (FWC)?

What is the Fair Work Ombudsman?

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Your Guide to the National Minimum Wage Increase

National Minimum Wage increase

Award minimum wage increase

Grow Your Business with QuickBooks

What else will change for business owners?

Keep Up to Date With QuickBooks

FAQs

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