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Australian Minimum Wage: Guide for Employers

hospitality worker at bar discussing the Australian minimum wage

Now more than ever as we struggle through the COVID-19 pandemic, and with recent incidences of wage theft in the news, it’s important to be aware of the regulations about minimum wage employees. But what is the minimum wage in Australia? Who decides it, and what can you do as an employer to help those working in minimum wage roles? Here’s a short guide to the Australian minimum wage.

What is the minimum wage in Australia?

In February 2021, the Fair Work Commission announced that it would increase new minimum wages in the retail, accommodation and food service sectors, along with other industries, by 1.75%, bringing the Australian minimum wage to $19.84 per hour or $753.80 per 38 hour week (before tax). This follows another increase of 1.75% in July 2020. Fewer than 2% of Australians work for minimum wage.

Even if they agree to it, employees cannot be paid less than their applicable minimum wage.

Some employees receive a different minimum wage, depending on their age, employment type and how many hours an employee works. For casual employees, an additional 25% casual loading is paid on top of the minimum wage rate.

Who sets the national minimum wage?

The national Australian minimum wage is set by the Fair Work Commission, which operates under the Fair Work Act 2009. Although there haven’t been any recent indications, the way in which the minimum wage is set could change should federal legislation be replaced or altered in any way.

Each financial year, the FWC’s Expert Panel conducts an annual wage review, issuing a decision and national minimum wage order for employees not covered by an award or agreement. This decision and order then come into effect on July 1 of the following financial year.

The FWC’s annual wage review affects employees in the national workplace system who are either covered by a modern award or transitional instrument or not covered by an award or agreement.

Under the Fair Work Act 2009, all employers are required to pay their employees a minimum wage, providing them with the security of fair pay and safe working conditions. If employers fail to comply, they will be subject to severe penalties of up to $12,600 per contravention of an individual or up to $63,000 per contravention for a body corporate, as well as back pay owed to the employee and interest.

The role of the Fair Work Ombudsman

The Fair Work Ombudsman helps to promote safe, fair and productive relations in the workplace. Supported by a team of staff, they assist with workplace compliance and advisory functions as set out in the Fair Work Act 2009, as well as monitor, investigate and enforce compliance with Australia’s workplace laws.

The Fair Work Ombudsman’s services are free, providing information about Australia’s workplace relations system, educating workers on their rights and obligations, assessing complaints or suspected breaches of workplace laws, building strong relationships with industry unions and other stakeholders, and, in some situations, litigating to enforce workplace laws.

The National Employment Standards (NES)

According to the National Employment Standards (NES), employees must be provided with 11 minimum employment standards. These include:

  • Maximum weekly hours
  • Requests for flexible working arrangements
  • Parental leave
  • Notice of termination and redundancy pay
  • Annual leave
  • Public holidays
  •  Long service leave
  • Community service leave
  • Offers and requests to shift from casual to full-time employment
  • Provision of Fair Work of Information Statement and Casual Employment Information Statement
  • Personal/carer’s leave, compassionate leave and unpaid family and domestic violence leave.

Casual employees only receive some NES entitlements, like unpaid carer’s leave and five days of unpaid family and domestic violence leave (in a 12-month period). Employers must provide a Casual Employment Information Statement and allow them the right to shift to full-time employment, depending on the circumstances.

What is an award?

In addition to the NES, most employees in the national workplace system are covered by an award.

Modern awards refer to a set of terms that define the minimum conditions for employees working in certain industries. They cover minimum pay rates, allowances, work hours, overtime, annual leave and penalty rates, among other things. In most cases, minimum wage employees cannot be paid less than the minimum wage outlined in the award.

Such conditions are legal requirements, so if they are breached, your business’s reputation could be seriously damaged, and result in major financial consequences in the long term.

However, if an employee is not covered by a modern award, an employer would be required to pay them a base rate that at least equals a minimum wage in Australia. This helps to protect against exploitation.

Minimum wage employees can also be covered under enterprise agreements, which are usually negotiated between employers and employees through a union, and can be made by more than one employer. It must not exclude the NES.

A modern award will not apply if an enterprise agreement applies to an employee. But in the event that an enterprise agreement is terminated and not replaced with a subsequent one, then a modern award will be applied.

Other types of registered agreements include collective bargaining, certified agreements, greenfields agreements, Australian workplace agreements (AWA) and individual transitional employment agreements (ITEA).

How you can help minimum wage employees

As an employer, it’s important to make sure that minimum wage employees feel valued and protected in the workplace. Create an open and supportive environment. Schedule regular meetings so employees can share their thoughts and concerns. Reinforcing how much their contribution means to your business can also be important in keeping people motivated.

Encourage them to build up their skills by providing training, workshops or seminars, as well as career advancement opportunities within your business. Employees are likely to be more engaged and productive if there’s a way for them to grow within the business.

Offering more flexibility can also help motivate minimum wage employees. Allow them more choice in what they do, and do your best to accommodate their schedule. By doing so, you show trust in their decision-making ability, promote teamwork and reduce the risk of tardiness and burnout. You also give minimum wage employees time to take care of other responsibilities, so they can return to work more refreshed.


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