Pay & Salary

A Guide to the Australian Minimum Wage for Employees

June 10, 2021

As an employee, there is a minimum amount you can be paid for doing a specific job. This is known as the minimum wage and refers to the base hourly or weekly rate you are to receive. The Australian minimum wage is exclusive of any bonuses, penalties, casual loading or superannuation you may be entitled to. In this article, we explain the Australian minimum wage for employees. We'll cover what the Australian minimum wage is and how it varies for different industries and individuals.

What is the Australian minimum wage?

The minimum wage is the lowest amount you can be paid to do a job. Australian minimum wages have been determined and set by an expert panel at the Fair Work Commission since 2010. Each year, the minimum wage is reviewed by the panel. Should they decide to make any changes, these usually come into effect on the first day of the following financial year.

The purpose of the minimum wage is to protect workers against unfairly low payment. Minimum pay rates ensure employees earn a minimum living allowance. They also encourage the fair distribution of organisation successes. Minimum wages play a part in helping to reduce poverty and increasing equality by promoting the right to equal pay for work of equal value.

The minimum wage that applies to you depends on several factors. These may include what industry you work in and how old you are, among other things, which we explain below:

The national minimum wage

The national minimum wage in Australia refers to the minimum base rate you can receive for doing any job. There are only a few exceptions to this rule, which include:

  • Junior workers (under the age of 21)
  • Supported Wage System workers
  • Apprentices and trainees

For all other employees, it is illegal for you to receive less than the national minimum wage. As of 1st July 2020, the national minimum wage in Australia is $19.84 per hour or $753.80 per week (before tax). If you're a casual employee who falls under the national minimum wage, then an extra 25% is paid on top of your base rate.

Industry award minimum wages

Unlike the national minimum wage, award wages refer to the minimum payment you can receive for doing a specific job within a specific industry. Each industry award outlines the minimum wages for different occupations within the industry, as well as conditions of employment (annual leave, penalty rates, etc.).

For example, as of 1st February 2021, a full-time, level 4 adult employee covered by the Fitness Industry Award 2020 is entitled to a minimum hourly rate of $24.04. This award also outlines all other foreseeable employer obligations to an employee in the fitness industry, for example, first aid and special clothing allowances. Employers are legally bound to their industry-specific award.

In some instances, you may find that, as an employee, you are not covered by an award. In this case, the national minimum wage is there to safeguard you.

Minimum wage for young workers

In Australia, any employee under the age of 21 is classified as a junior employee. If you are a junior employee, different minimum wages may apply to you. Australian minimum wages for junior employees are determined as a percentage of the national minimum wage or specific industry award.

The aim of having a different set of minimum wages for juniors is to provide opportunities for young workers to enter the job market. It gives them a competitive edge over senior employees who need to be paid more. For employers, it's a way of reducing the cost of staffing their business.

If you are not under an award as a junior employee, the percentages of the national minimum wages are as follows:

  • under 16 years of age: 36.8% of national minimum wage = lowest hourly rate of $7.30
  • 16 years of age: 47.3% of national minimum wage = minimum hourly rate of $9.38
  • 17 years of age: 57.8% of national minimum wage = minimum hourly rate of $11.46
  • 18 years of age: 68.3% of national minimum wage = minimum hourly rate of $13.55
  • 19 years of age: 82.5% of national minimum wage = minimum hourly rate of $16.36
  • 20 years of age: 97.7% of national minimum wage = minimum hourly rate of $19.38

If you are under an award, the percentage of the industry-specific minimum wage you get paid may be different. For example, as of 1st February 2021, a level 1 junior employee under the age of 16 covered by the General Retail Industry Award is entitled to a minimum hourly rate of $8.92. This rate is calculated at 45% of the national minimum wage.

Minimum wage for apprentices

An apprentice is an employee undergoing a formal training contract with their employer through a Registered Training Organisation. If you're an apprentice, the Australian minimum wage applicable to you depends on several factors, including:

  • your age
  • the award your employment is covered by
  • how long your apprenticeship is
  • what level of your apprenticeship you are on (apprenticeships are tiered).

For example, an adult first-year apprentice mechanic in stage one of their apprenticeship under the Vehicle Industry Repair Service and Retail Award is entitled to $18.48 per hour or $702.10 per week.

When an apprentice moves to the next level of their apprenticeship they are entitled to a higher minimum wage. Moving to the next level of an apprenticeship is done in one of two ways, depending on which award it's under:

  • After working a certain period, for example, 12 months.
  • After reaching a level of competency. For example, achieving a milestone amount of the total apprenticeship skill requirements.

The Supported Wage System minimum wage

For employees who have a disability that affects their capacity to work, they may be eligible for the Supported Wage System (SWS). The Department of Social Services is responsible for assessing an employee's eligibility for an SWS rate, not the employer.

If you are on the SWS and employed under an award, you are entitled to a percentage of the Australian minimum wage for your specific occupation and industry. The percentage is calculated on assessed work capacity. For example, if an independent assessor deems you capable of carrying out 80% of the role, then you are entitled to 80% of the relevant minimum rate. If there are no provisions for the SWS in the award, then you must be paid the full rate for your classification.

If you are on the SWS and not covered by an award, you are entitled to a percentage of the national minimum wage.

Penalty rates and allowances

Paid on top of the minimum wage are penalty rates and allowances (where applicable). If you're employed under an award or other type of registered agreement, your penalty rates and allowances will be stipulated in your award or agreement.

Penalty rates are paid to employees on top of their award or agreement base rate in cases when working:

  • on weekends
  • on public holidays
  • overtime
  • shifts late in the evening
  • shifts early in the morning.

Allowances are paid to employees on top of their award or agreement base rate in cases when:

  • doing specific tasks or possessing particular skills
  • using their equipment on the job
  • working in challenging or risky conditions.

Allowances commonly include:

  • uniforms or other job-specific clothing
  • equipment and tools
  • travel
  • transport and mobile phone
  • first-aid.

Minimum wage and superannuation

Superannuation is not included in the Australian minimum wage, whether under the national base rate or an industry award. Because of this, it's essential to understand your employer's obligation to you concerning minimum wages and super.

Superannuation exists to help employees save for their retirement. It involves your employer contributing to your nominated superannuation account. The contribution needs to be the equivalent of 9.5% of your ordinary time earnings. Superannuation is paid in addition to the minimum wage for your ordinary time earnings (OTE). Your OTE can include:

  • commissions
  • allowances or
  • loadings.

If you earn at least $450 (before tax) in a calendar month, you are entitled to receive at least 9.5% of your OTE in superannuation. If you are under 18 or work privately or domestically, you need to work a minimum of 30 hours per week to be eligible for super contributions. If you are eligible for superannuation contributions, your employer needs to make the contributions a minimum of four times per year.

Minimum wage breaches

Businesses are legally required to remunerate their employees in line with the national minimum wage and modern awards. Failure to do so can result in costly penalties. Sometimes mistakes can happen. So, if you feel like there has been a mistake with your pay rate, there are a few things you can do:

  • Talk to your employer about the mistake.
  • Seek advice from The Fair Work Ombudsman if you are unable to resolve the issue with your employer.

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