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When it comes to paying your employees, you want to ensure you get it right. If you fail to pay your employees correctly, your employees or the Fair Work Ombudsman can initiate legal proceedings against you. Ultimately, your employee’s pay will depend on the relevant award, enterprise agreement or, in the absence of either, the national minimum wage

As it currently stands, Australia’s minimum wage is $772.60 for a 38 hour week or $20.33 per hour. This article outlines some key considerations to ensure that you pay your employees correctly.

Australia’s Minimum Wage

There are a range of legal instruments regulating wages in Australia, the first being the national minimum wage. The national minimum wage provides a starting point to calculate your adult employees’ wages. It is a minimum pay rate set out in the Fair Work Act. Likewise, each year, a Fair Work Commission Expert Panel revises and changes the minimum wage rates.

As of 1 July 2021, the national minimum wage is $20.33 per hour or $772.60 per week. This had changed since 1 July 2020, where the national minimum wage was previously $19.84 per hour or $753.80 per week.

Although the national minimum wage applies to all your adult employees, your business can pay less than the minimum to certain employees, including those:

  • under the age of 21;
  • under a registered training arrangement like an apprentice; and
  • on a supported wage as a result of any impairments to their work.

Since the national minimum wage is subject to change each financial year, you should ensure that you pay your employees according to the new minimum. As mentioned above, a failure to pay your employees their correct wages can open your business to costly legal proceedings. In any event, you will be liable to pay your employees any outstanding wages. For this reason, it is important to keep up to date with any minimum wage increase.

Minimum Wage and Modern Awards

Since the national minimum wage sets the baseline rate of pay for adult employees, a modern award cannot provide less than the national minimum average. In Australia, most employees are covered by an award. For this reason, you must know which awards cover your employees to ensure that you pay them at the correct rate. 

To clarify which award applies, you should consider a modern awards:

  • coverage clause (typically clause 4); and
  • job classifications (typically in the schedule or pay clause).
Clause Explanation
Coverage Clause

This clause details which industry the award applies to. For example, the General Retail Industry Award includes:

  • retailers; 
  • department stores; 
  • bakeries; and 
  • news agencies. 

The type of employees under this specific award include:

  • sales assistants;
  • shelf stackers; 
  • store managers;
  • tradespersons; and 
  • back-office employees. 
Job Classifications This clause covers your employees’ specific duties. For example, under the Restaurant Industry Award, some classifications include waiters and waitresses, baristas, cooks and storeroom employees.

Notably, a single employee may be covered by more than one award. This is because they may have varied responsibilities in the workplace. 

To clarify which award applies to your employees, you can use the find my award tool on the Fair Work Website. Additionally, you can get in touch with one of our experienced employment lawyers who can clarify your obligations under the relevant award.

Minimum Wage and Enterprise Agreements

An enterprise agreement might also cover employees within your business. An enterprise agreement will replace a modern award that might cover your employees in this instance. Nevertheless, the minimum wage rates in your enterprise agreement cannot be lower than a modern award.

Enterprise agreements allow you to decide with your employees their workplace entitlements without having to navigate the complex award system. However, the Fair Work Commission must approve enterprise agreements considering these agreements must leave employees better off overall when compared to the relevant modern award.

If an enterprise agreement covers your employees, its provisions should stipulate their minimum wage. As with the national minimum wage and modern awards, any breaches can result in legal proceedings brought against you. In this instance, you might have to pay outstanding wages in addition to penalties for breach of the Fair Work Act.

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Key Takeaways

The national minimum wage provides a starting point to calculate your adult employees’ wages. As of 1 July 2021, the National Minimum Wage is $20.33 per hour or $772.60 per week. Generally, this minimum wage increases each year. For this reason, it is important to stay up to date with your employee’s entitlements. If you want to clarify your employee’s wage entitlements, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

Frequently Asked Questions

Can an employer pay their staff less than the national minimum wage?

The national minimum wage applies to all your adult employees. However, you can pay junior employees, employees under a registered training arrangement and employees on a supported wage less than the minimum.

How often does the national minimum wage change?

A Fair Work Commission Expert Panel generally revise and change the minimum wage rates each year. The Changes tend to come into effect on 1 July. 

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