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Understanding the minimum wage in Australia

ANZ Financially Ready

2024-02-19 05:30

The minimum wage is something small business owners need to know about if they’re ready to hire staff. It’s an important part of paying wages. Getting it wrong, or not doing it at all, can lead to costly consequences.

There’s lots of information about the minimum wage out there, so it can be easy to get your wires crossed and feel overwhelmed or confused. That’s why we’re here to break it all down and explain everything you need to know.

What is the minimum wage?

The minimum wage is the lowest amount an employer can legally pay their staff before tax. All Australian employees, from full-time to casual workers, are entitled to be paid the minimum wage.

How much is the minimum wage in Australia?

The Fair Work Commission sets the national minimum wage and reviews it every year. They might change the minimum wage based on several factors, such as the economic climate or employment rates. If they change the minimum wage, business owners have to pay the updated rate from the start of a new financial year.

You can find the exact minimum wage amount on the Fair Work Commission website.

Are there different types of minimum wage?

In short, yes. The minimum wage you pay depends on the industry you work in and your ‘award’ – a legal document that explains the employment conditions and minimum pay rate that your industry must follow.

From hospitality to cotton ginning, vehicle repair to firefighting, there are over 100 industries covered by an award – so it’s important you check which award suits your business. Having said that, there are some industries and situations where your business or role might not be under an award. For example, if you’re hiring a manager they won’t be covered by an award even if the industry your business operates in is.

If you find that a role or business isn’t covered by an award, then you’ll have to pay your staff the National Minimum Wage and follow the National Employment Standards.

Who does the minimum wage affect?

  • Full time workers work around 38 hours each week. You have to pay a full-time worker at least the minimum wage – but you can pay them more.
  • Part time workers work less than 38 hours each week, but these hours are usually consistent each week. You must pay a part time worker at least the minimum wage – but you can pay them more.
  • Casual workers don’t have a set number of hours or days they work each week. Their schedule can change depending on the employer’s needs. You must pay a casual worker casual loading or a specific rate for being a casual – both of these payment options must be at least the minimum wage plus the required casual loading.
  • Apprentices and trainees have unique pay and wage requirements. An apprentice must be paid the apprentice rates if they are training in your place of work and are registered through a training authority, such as TAFE. These rates depend on the length of apprenticeship and the training they’ve already done. Full-time and part-time apprenticeships exist, and all trainees who are working towards a qualification in their industry must be paid the National Training Wage.
  • Junior employees are staff who are under 21 years old. They are paid a certain percentage of the adult pay rates if their award doesn’t have junior rates. You can head to the Fair Work Ombudsman website to learn more.
  • Workers with disability have the same wage rights as other employees – unless they’re covered by the Supported Wage System. This is when an employer pays wages to a worker with disability based on their working capacity. You can learn more about this system on the Job Access website.

Does your business need to pay the minimum wage?

Like with most things in life, there are consequences if you do the wrong thing. If you don’t pay your staff the minimum wage, they can report you to a wage theft inspectorate. If you’re reported, you may have to pay back what your staff are entitled to on top of interest. This can be a costly mistake for lots of small businesses, so knowing the minimum wage (and paying it) is important.

Every state and territory has different laws around wage theft and underpaying staff, so it’s vital that you know which ones apply to you. Put your research hat on and make sure you know what’s what.

How much superannuation do you need to pay?

All employers need to contribute to their staff’s superannuation if the staff is over 18 years old, or is under 18 years old and works over 30 hours a week. The superannuation contribution that an employer must pay is currently 11 per cent of the employee’s pay, and will go up to 12 per cent on 1 July 2025. Employers must pay their staff’s super into their nominated account at least every three months. This applies to full-time, part-time and casual employees. Like with wage theft, your staff can report you to the Australian Taxation Office (ATO) if you don’t pay their superannuation.

Next steps

Before hiring staff ensure you’re fully informed about the minimum wage and your legal obligations and head to the Fair Work Ombudsman website to learn which award is right for your business.

Understanding the minimum wage in Australia
Business specialist
ANZ Financially Ready

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