The annual wage review (AWR) in Australia is a significant event for most employees in Australia. It sets the lowest rate an employer can legally pay their employees in Australia (effective from 1 July), impacting award rates and often influencing overall salary adjustments. But what does the AWR mean for your specific salary? Will it automatically bump up your pay?
The short answer is no, the AWR doesn’t guarantee a direct salary increase for every employee. However, it can nonetheless be a valuable tool in your salary negotiation toolbox.
Here’s how to understand the AWR’s impact and position yourself for a potential raise:
Understanding the AWR
Understanding the AWR
The AWR sets the minimum wage increase for employees. The most recent 2023-2024 AWR will see a 3.75% increase (effective 1 July) in the national minimum wage and all modern award minimum wages. This increase is largely driven by the rising cost of living for low-income households. While this doesn’t directly translate to your raise, it sets a benchmark for wage growth in many sectors.
What Does the 2023-2024 Wage Increase Mean?
The 3.75% increase translates to a new national minimum wage of $915.90 per week or $24.10 per hour, effective from 1 July 2024 (up from $882.80 per week and or $23.23 per hour). If you work a 38-hour week, this means you’ll earn an extra $33 per week (gross).
Keep in mind that the figures we are talking about here are gross figures, subject to tax. So, if you work a 38-hour week, your take-home pay will be about $718.91 a week.
Modern Award Covered Employees
If your employment is covered by a Modern Award (i.e you get paid according to an Award classification and are entitled to allowances, penalties and loadings), then from 1 July 2024, if your wage was less than $24.10 per hour of $915.90 per week (for a full-time employee), you wage is set to increase!
Award/Agreement-Free Employees
Not all employees are covered by a Modern Award. Regardless, because the national minimum wage has increased by 3.75%, if your salary was less than $24.10 per hour or $915.90 per week (for a full-time employee), you’re entitled to a raise.
All-inclusive Salary Employee
It is becoming more and more common for employers to craft employment contracts that state that your salary is “all-inclusive” of any entitlements that you may otherwise be entitled to under a Modern Award.
In other words, rather than paying you the minimum wage, plus allowances and loadings, you will receive a higher salary that is said to absorb those additional incentives.
That’s potentially great if your salary is significantly higher than the minimum wage and you can be confident that you are receiving what you would otherwise be entitled to under the Award (and more).
However, your employer may not be so diligent in tracking their compliance. Particularly, if your salary is only marginally higher than the minimum wage (noting that from 1 July it will increase by 3.75%) then you may find that your all-inclusive salary no longer cuts the mustard.
Agreement Covered Employees
In some instances, you may find that your employment is covered by an Enterprise Agreement (as opposed to a Modern Award).
The AWR still applies to you. From 1 July 2024, your base pay rate needs to be increased to reflect the new national minimum wage.
Other Factors Affecting Your Salary
Several factors beyond the AWR influence your salary:
- Your Industry: Different industries experience varying growth rates, impacting salary adjustments. Some sectors might offer higher raises than the AWR increase.
- Your Experience and Performance: Your expertise and track record, within your role, play a major role in one-on-one salary negotiations with your employer. This is particularly relevant if you are an Award-free employee and paid an annual salary.
- Company Performance: A company’s financial health directly affects its capacity to offer pay raises.
- Your Negotiation Skills: Knowing how to present your value and achievements is crucial for securing a pay rise.
Leveraging the AWR for a Raise
While the AWR doesn’t guarantee a raise, it provides valuable data for negotiation:
- Research Industry Trends: You should check out salary guides and surveys specific to your profession and location. This helps you understand the average salary range and gives you greater confidence that what you want to ask for is within the ballpark of reasonable and achievable.
- Highlight Your Value: Document your achievements, contributions, and exceeded targets. Quantify your impact whenever possible. For instance, did you recently complete a project that generated significant revenue for your company? Did you win a large client, or create an idea that will propel the company’s product or services to new heights?
- Prepare a Negotiation Strategy: it can be useful to talk to a career coach to learn how to best put yourself out there for a salary rise. Practice your pitch and rehearse potential counter-offers (for e.g. if you want a $5,000 pay rise you might start by asking for $6,000 and ultimately be happy to settle for $4,500). Use the AWR as a reference point for the minimum expected raise, considering the 3.75% increase as a baseline, but aiming for a figure that reflects your worth.
- Focus on Your Worth: Don’t just rely on the AWR. Emphasise the value you bring to the company beyond minimum wage standards.
Beyond the AWR
The AWR is one piece of the puzzle. Here are some additional tips to increase your earning potential:
- Develop New Skills: Continuously learning and upskilling can make you a more valuable asset, justifying a higher salary.
- Network and Build Relationships: Industry connections can open doors to new opportunities with better compensation packages.
- Consider Alternative Compensation: Negotiate for additional benefits like paid leave, professional development opportunities, or flexible work arrangements.
Remember: Negotiation is a conversation. Approach your employer with data, confidence, and a willingness to discuss a mutually beneficial raise.
By understanding the AWR’s role, and the specific details of the 2023-2024 increase, and combining it with strong negotiation skills, you can significantly increase your chances of securing a well-deserved salary increase.
What if Things go Pear-Shaped?
How We Can Help!
Of course, being employment lawyers we understand all to well that things do not always go to plan. Perhaps your employer is turning a blind eye to the AWR and refusing to increase your salary. Or maybe you have tried negotiating a salary increase and been met with extreme hostility.
If these examples reflect your experience – we at Rubix Legal can help.
We will ensure you understand your rights and help you get what is rightfully yours. We’ll help you navigate any challenging circumstances such as adverse treatment or bullying behaviours and arm you with the confidence you need to take a stand for your rights.
