By Brigitta Polous

The Fair Work Commission (the Commission) is responsible for reviewing and setting minimum wages for employees in Australia. The minimum wage represents the minimum payment that an employee can be paid for their ordinary hours of work.

Employers are not allowed to pay below the minimum wage rate or include any clause in an employment contract that provides for 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 $21.38 per hour (with an additional 25 per cent casual loading for casual employees). This national minimum wage came into force on 1 July 2022. An increase to the national minimum wage will apply from the first full pay period on or after 1 July 2023, as part of the Commission’s annual national minimum wage order.

However, there are also different entitlements to wages, allowances, and penalties for different industries and occupations that are set by modern awards and enterprise agreements.

What is a modern award?

Did you know that there are more than 100 industry or occupation awards that cover most employees in Australia? Awards are a fundamental part of the industrial relations system that sets out the minimum working conditions and entitlements for employees, including hours of work, wages, breaks, and penalty rates.

There are both industry-based and occupational-based awards that may apply to your business, depending on the industry you operate in and whom you employ. Awards stipulate different minimum rates of pay based on an employee’s relevant classification under the award. Each employee’s classification will depend on a variety of factors, depending on which award applies, but may include factors such as the individual’s experience, qualifications, skills, and level of supervision or autonomy.

When does a modern award not apply?

If your business is covered by an enterprise agreement, any award that would have been applicable will not apply to your employees who are covered by that agreement.

There are also some employees who will not be covered by either an enterprise agreement or an award. The minimum wage for award/agreement-free employees is the national minimum wage set by the Commission in the national minimum wage order as detailed above.

Industry wages

As an employer, you are responsible for making sure that your employees always receive their correct entitlements, and failure to do so can result in costly underpayment rectification later down the track and possible penalties. When trying to work out how much to pay your employees, you first need to consider whether there is an applicable industry or occupational award that applies. After you have determined the correct award; you will then need to determine what level/classification your employee is under that award to avoid underpayment.

If you’re unsure about what award or enterprise agreement your employees are covered by, you should seek advice immediately. Reach out to our workplace relations experts via our 24/7 Telephone Advisory Service.

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