The Fair Work Commission is responsible for reviewing and setting minimum wages for employees in Australia. A minimum wage in Australia is the lowest that an employee can be paid for their ordinary hours of work.
Employers are not allowed to include any provision in an employment contract that provides a lower rate of pay than the minimum wage even if the employee was to agree to this.
Currently the national minimum wage for award and agreement free employees is $18.29 per hour (and an additional 25% casual loading for casual employees). This national minimum wage was set for 1 July 2017. An increase will apply from the first full pay period on or after 1 July 2018 as part of the Fair Work Commission’s annual national minimum wage order.
However, there are also different entitlements to wages, allowances and penalties for different industries and occupations set by modern awards and enterprise agreements.
What is a modern award?
Most employees in Australia will be covered by a modern award. Awards are a fundamental part of Australia’s Fair Work System which set out the minimum wage, and other minimum conditions, including hours of work, breaks, and penalty rates for employees in certain industries and occupations.
There are both industry and occupational awards which may apply to your business depending on who you employ. Awards stipulate different minimum rates of pay based on the employee’s relevant classification under the award. Each employee’s classification will depend on factors such as the individual’s experience, qualifications, skills and level of supervision.
When does a modern award not apply?
If your business is covered by a registered agreement, such as an enterprise agreement, an award will not apply to your employees who are covered by that agreement.
There are also some employees who will not be covered by a registered agreement or award at all. Employees not covered by an award or enterprise agreement must still be paid no less than the national minimum wage set by the Fair Work Commission in the national minimum wage order.
As an employer you are responsible for making sure that your employees always receive their correct entitlements! When trying to determine how much to pay your employees, you first need to consider whether there is an applicable industry or occupational award. Even after you have determined the correct award you will then need to know what level/classification your employee is under the relevant award.
If you are unsure about what award or enterprise agreement your employees are covered by, you should seek advice immediately. For workplace relations advice for employers, contact us today for an informal chat.