Work choices: Australian minimum wages
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A minimum wage is an employee’s base rate of pay for ordinary hours worked, and is generally dependent on the industrial instrument that applies to their employment (for example, a modern award, enterprise agreement, transitional pay scale, or national minimum wage order).
The minimum wages received by employees in the national workplace relations system are reviewed by Fair Work Australia annually, with any adjustments taking effect on 1 July each year.
The review considers the rates of pay in:
- modern awards – from 1 January 2010, these will specify the minimum wage rates for employees covered by a relevant modern award
- the National Minimum Wage – this will apply to award or agreement-free employees from 1 July 2010.
Employers and employees cannot agree to a rate of pay which is less than the applicable minimum wage.
The minimum wages received by employees in the national workplace relations system are determined annually by a specialist Minimum Wage Panel of Fair Work Australia.
Any determinations made to vary minimum wages in modern awards or a national minimum wage order will apply from the first full pay period on or after 1 July each year.
From 1 January 2010, modern awards replace most existing awards and transitional pay scales, and contain the minimum terms and conditions for employees in particular industries and occupations. While modern awards contain minimum wages, some modern awards have transitional arrangements in place, whereby the wage-related components do not come into effect until 1 July 2010, and may be phased in over five years.
Employers should check their relevant modern award(s) to determine if transitional arrangements apply. If there are no transitional arrangements, the modern award pay rates apply from 1 January 2010.
Minimum wages under modern awards may include:
- wages rates for adults, in some cases, at different rates according to experience and qualifications
- wage rates for juniors, employees with a disability, and employees to whom training arrangements apply
- casual loadings
- piece rates.
An employee cannot be paid less than the base rate of pay that would be payable to them under a modern award.
The Minimum Wages Panel of Fair Work Australia makes a national minimum wage order for employees not covered by an award or agreement. An employee cannot be paid less than the national minimum wage order.
The national minimum wage order must set the following wages for award or agreement-free employees:
- a national minimum wage
- a special national minimum wage for
- trainees, apprentices and junior employees
- employees to whom training arrangements apply
- employees with a disability
- a casual loading.
From 1 July 2016 national minimum wage has been revised by Work Fair Commission to improve the rates of pay for employees covered by modern awards or transitional pay scales.
The Minimum Wages Panel is not required to set a special national minimum wage for trainees, apprentices and juniors until its 2011 Annual Wage Review.
The federal minimum wage from 1st July 2016 will be $17.70 per hour or $672.70 per 38 hour week (before tax).
Casual employees covered by the national minimum wage also get at least a 25 per cent casual loading.
An employer must not contravene a term of a modern award or a national minimum wage order.
Suspected contraventions will be investigated and enforced by the Fair Work Ombudsman. A contravention of a term of a modern award or a national minimum wage order may result in penalties of up to $ 10,800 for an individual and $54,000 for a corporation.
Please note that the information provided on this page:
- Does not provide a complete or authoritative statement of the law;
- Does not constitute legal advice by Net Lawman;
- Does not create a contractual relationship;
- Does not form part of any other advice, whether paid or free.
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