What is the minimum wage?
The minimum wage is the lowest amount an employer can legally pay a worker. In Australia, it serves as a key safeguard under national workplace laws and is enforced by the Fair Work Commission and the Fair Work Ombudsman. The national minimum wage applies to employees who are not covered by an award or enterprise agreement. Most workers, however, do fall under one of these and are usually entitled to higher pay and additional conditions.
The Fair Work Commission reviews the minimum wage every year. During this process, it considers input from unions, business groups and members of the public, and it looks at factors such as inflation, the cost of living, business sustainability and employment trends. The updated wage rates are typically announced in June and take effect from the first full pay period on or after 1 July.
Essentially, minimum wage laws are designed to ensure that employees are paid fairly for their work. They also help to address inequality and promote a fairer distribution of income across the workforce.
Current national minimum wage in Australia
From 1 July 2025, the national minimum wage for adult employees not covered by an award or enterprise agreement has increased by 3.5% to $24.95 per hour, or $948 for a 38-hour week, before tax. This applies to full-time and part-time employees. Casual employees must also receive a 25% loading, which brings their minimum hourly rate to $31.19 to compensate for the lack of paid leave and other entitlements.
This increase is designed to reflect changes in the cost of living and maintain fair pay for all workers. For employers, it is a reminder to check pay rates each year and take care that payroll systems are adjusted from the first full pay period after 1 July.
How minimum wage obligations vary
Not all employees receive the same minimum rate of pay. The actual minimum a worker is entitled to depends on a range of factors, including age, job classification, the presence of any registered agreement or award, training status and disability status. Employers are legally obliged to ensure that each worker receives the correct rate based on these factors.
For instance, an adult worker on a national minimum wage may receive the base rate, but a worker covered by a hospitality or retail award may be entitled to a higher rate, including penalty rates for weekends or late-night work. Similarly, employees engaged on a casual basis receive an additional loading, while junior employees and trainees may be paid according to different scales.
Awards and how they affect pay
Modern awards are legally binding documents that cover specific industries and occupations. They set out the minimum wages and conditions that apply in those sectors, and often include detailed provisions for job classifications, pay progression, penalty rates, allowances and other entitlements. Award rates are frequently higher than the national minimum wage and are also updated annually in line with the Fair Work Commission’s wage review.
Modern awards often set different pay rates depending on an employee’s experience, skill level or qualifications. For instance, a qualified tradesperson is likely to earn more than someone just starting out in the same role. Awards also usually include provisions for things like overtime, public holiday rates, allowances and other workplace conditions. It is important that employers know which award applies to each employee, and to make sure they are meeting all the requirements.
Enterprise agreements and registered agreements
Some workplaces operate under enterprise agreements, which are negotiated arrangements between an employer and their employees (or their union representatives). These agreements need to be approved by the Fair Work Commission and must result in employees being better off overall than they would be under the applicable award. In many cases, enterprise agreements provide higher pay rates and additional conditions, tailored to the specific needs of the workplace.
For example, a large retailer might have an enterprise agreement with its employees that includes higher weekend penalty rates, more flexible rosters or extra allowances. These agreements must be clearly communicated to staff and followed exactly. Where they apply, they override modern awards as long as they meet the Better Off Overall Test (BOOT).
Employment contracts and minimum pay
Some employees are hired under individual employment contracts that offer higher wages or different pay structures, like commission or bonuses. But no matter how pay is arranged, the total must still meet the minimum entitlements under the relevant award, agreement or national standard.
Even when workers are paid by commission or piece rates per task, they must earn at least the minimum hourly rate for every hour worked. If the required minimum is not met, even unintentionally, employers may have to back-pay wages and could face penalties.
Junior employee rates
Employees under the age of 21 may be subject to junior pay rates. These are typically a percentage of the relevant adult minimum wage and increase each year on the employee’s birthday until they reach full adult pay rates. The applicable percentage depends on the employee’s age and the specific provisions of their award or agreement. If a junior employee is not covered by a specific award or agreement, the national minimum wage percentages for juniors apply.
From 1 July 2025, junior minimum wage rates have increased in line with the 3.5% rise to the national minimum wage. These rates are calculated as a percentage of the full adult rate, depending on the employee’s age. As a guide:
- employees under 16 are entitled to 36.8% of the adult minimum wage, now $9.23 per hour
- at 16, the rate is 47.3%, or $11.80 per hour
- at 17, it rises to 57.8%, or $14.43 per hour
- eighteen-year-olds receive 68.3%, or $17.05 per hour
- nineteen-year-olds are entitled to 82.5%, or $20.59 per hour
- at 20, the rate is 97.7%, or $24.38 per hour.
These junior rates apply from the first full pay period on or after 1 July 2025. However, they may differ if an award or enterprise agreement sets out other arrangements. Employers need to check the applicable award or agreement before setting pay for junior employees, and to keep track of their birthdays to ensure rate increases are applied at the right time.
Apprentices and trainees
Different minimum wage rules also apply to apprentices and trainees. These workers are employed in formal training roles and usually earn lower wages while they work towards a nationally recognised qualification. Their pay is set by the relevant modern award or a registered training agreement.
Apprentices are generally covered by the Miscellaneous Award 2020, which outlines rates based on factors such as the year of the apprenticeship, type of qualification and whether the person has completed Year 12. Trainee wages are usually set under Schedule E of the same award and are based on the trainee’s age and the duration or level of the training.
Although their rates are lower than those of fully qualified employees, apprentices and trainees are still entitled to minimum conditions. Employers need to meet the award requirements, provide appropriate supervision and make sure the agreed training is actually delivered.
Employees with disability
In Australia, employees with disability have the same rights and protections as any other worker. However, some workers whose productivity is affected by their disability may be paid a pro rata wage under the Supported Wage System. This is a special arrangement assessed by a qualified assessor in consultation with the employer and employee.
There are two categories of special minimum wages in this context:
- special national minimum wage 1 applies to employees with disability whose productivity is not affected. These employees are entitled to the full national minimum wage, now $24.95 per hour, as of 1 July 2025
- special national minimum wage 2 applies to workers whose disability limits their productivity and who qualify for the Disability Support Pension. In these cases, wages are based on an approved percentage scale linked to the adult minimum wage. The exact rate depends on the worker’s assessed capacity and is outlined in Schedule A of the National Minimum Wage Order.
These provisions help promote inclusive employment while ensuring that pay remains fair and appropriate. Any supported wage arrangement must go through the formal assessment process set out in the Supported Wage System.
Casual workers
Casual employees are not entitled to paid annual leave or personal leave, but must be paid a casual loading to make up for these missing entitlements. The minimum loading is 25% and is added to the base hourly rate. From 1 July 2025, this means casuals covered by the national minimum wage must receive at least $31.19 per hour, which includes the 25% loading on the new base rate of $24.95.
Some awards or enterprise agreements may set higher casual loadings or provide additional conditions, such as penalty rates for weekend or evening work. Casual employees may also be eligible to request conversion to permanent employment if they have worked consistent hours over a set period. Employers need to keep track of these entitlements and make sure casual staff are paid correctly for every shift.
Superannuation obligations
Although superannuation is not included in minimum wage calculations, it is still a compulsory employer obligation. From 1 July 2025, the minimum superannuation guarantee (SG) rate has increased to 12% of an employee’s ordinary time earnings (OTE). This rate applies to all eligible employees and has to be paid at least quarterly. The SG is calculated based on the date the employee is paid, not the date the work was performed.
Employers may be required to pay a higher super rate if an award or agreement specifies it. If an employee starts during a quarter, super must be paid on any wages earned within that quarter.
Missing a payment or failing to meet superannuation obligations by the due date may result in penalties, including the super guarantee charge, which includes interest and administration fees. Employers should use the ATO’s Super Guarantee contributions calculator or consult their payroll system to ensure accurate and timely contributions.
Staying compliant as an employer
Employers in Australia are required by law to meet minimum wage obligations. These requirements fall under the Fair Work Act 2009 and are enforced by the Fair Work Ombudsman. Any underpayment of wages, whether intentional or not, can lead to significant financial penalties and damage to the employer’s reputation.
To stay compliant, employers therefore need to regularly check the awards and agreements that apply to their staff and ensure they are across any updates. Minimum wage increases take effect each year from 1 July, so it is important that pay rates are updated promptly. Payslips need to clearly show hours worked, pay rates and any applicable loadings or allowances, and employers also have to keep accurate records of what exactly has been paid.
Using tools such as the Fair Work Pay Calculator can help employers determine the correct minimum wage for each employee. If you are at all unsure about pay rates, entitlements or how to classify a role, it is best to get advice from the Fair Work Ombudsman or a qualified workplace adviser.
