An overview of FY 24-25 minimum wage in Australia

Published

Oct 17, 2024

Author

The minimum wage in Australia provides a baseline for earnings. It also acts as an important safety net that protects workers from exploitation and helps maintain a fair standard of living in the face of rising living costs. For businesses, non-compliance with minimum wage requirements can result in substantial financial penalties alongside reputational damage.

In this article, we provide a comprehensive overview of the national minimum wage, including the current rates, how the wage applies to different worker categories, and what employers must do to stay compliant.

The information provided in this article is accurate as of 07/10/2024. For the most up-to-date information, please refer to the Fair Work Act 2009.

What's the national minimum wage in Australia?

Minimum wage refers to the lowest legal amount you can pay your staff for their ordinary hours of work. Its core purpose is to reduce income inequality and support a decent quality of life for workers across a range of industries.

The Fair Work Commission sets and reviews the national minimum wage order each year, considering factors like inflation, cost of living, and productivity. This ensures that the minimum wages apply fairly to low-paid workers while reflecting the current economic conditions.

As of 1 July, 2024, Australia's national minimum wage is $24.10 per hour or $915.90 per week for a full-time employee working 38 hours a week. This represents a 3.75% increase over the previous year, in response to rising living costs and economic pressures. Certain categories of workers, such as trainees and apprentices, earn a special national minimum wage, designed to reflect their specific circumstances, including their level of training and experience.

How minimum wage applies to different workers

Below, you can explore a guide to how the national minimum wage applies to different workers not covered by an award or enterprise bargaining agreement (EBA):

Full-time and part-time employees

Full-time and part-time employees both earn at least the national minimum wage. Part-time employees' weekly pay adjusts according to the number of hours they work.

Example: While a full-time employee has a right to a minimum of $915.90 per week, a part-time employee who works 20 hours per week would earn a minimum of $457.95 per week.

Casual employees

As casual employees lack job stability and paid entitlements, such as annual leave, they receive a 25% casual loading on top of the minimum wage.

Example: A casual employee who earns the national minimum wage of $24.10 per hour would receive an additional 25%, bringing their total pay to $30.13 per hour.

Junior employees

Junior employees (under 21) receive a percentage of the adult minimum wage, which increases as they get older.

Example: A 17-year-old earns 57.8% of the adult minimum wage, which equals $13.93 per hour based on the current minimum hourly rate of $24.10. 

Apprentices and trainees

Apprentices and trainees earn a lower minimum wage because of their training status, though their pay increases as they advance through each stage of their apprenticeship or traineeship.

Example: A second-year apprentice earns roughly 61% of the full adult rate, equating to $559.40 per week or $14.72 per hour.

Supported Wage System employees

The Supported Wage System applies to employees with disabilities who may not have the capacity to earn the full minimum wage. Their pay reflects their productivity as assessed against the standard work rate.

Example: An employee with a productivity level assessed at 50% earns 50% of the national minimum wage. Under the Supported Wage System, this would mean earnings of $12.05 per hour, based on the current minimum wage of $24.10 per hour.

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Industry-specific minimum wages (Modern Awards)

In Australia, Modern Awards outline specific terms and conditions of employment for various industries and occupations. These awards often set different minimum wages (often higher) than the national minimum wage, considering the unique demands and conditions of each sector.

Employees covered by an award have a right to the higher rates and specific conditions outlined within their relevant award, which can vary significantly across industries.

An employee's minimum wage depends on their classification or level within their industry award. Each award categorises employees based on their duties, skills, and experience. As a result, a higher classification or level within an award typically results in a higher minimum rate of pay.

For example, a Level 1 worker might earn the base award rate, while a Level 3 worker, with more experience or responsibility, earns more. As an employer, it's important to comply with the award-specific rates, penalties, and allowances.

Below, you can see some examples of the minimum wages set by various industry awards:

General Retail Industry Award: The current minimum hourly rate for a level 1 employee under this award is $25.65.
Fitness Industry Award: The minimum hourly rate a level 1 employee can earn under this award is $23.46.
Banking, Finance and Insurance Award: An employer has to pay a level 1 employee under this award a minimum of $24.87 per hour.
Professional Employees Award: Under this award, the current minimum hourly rate for a level 1 graduate employee (with a 3 year degree) is $31.09.
Health Professionals and Support Services Award: For a level 1 support services employee, the minimum hourly rate is $24.87.

How overtime and penalty rates affect minimum wage calculations

It's important to understand when overtime and penalty rates apply in addition to the minimum wage. If your employees fall under a Modern Award or enterprise agreement, these rates are mandatory and may increase wages by 150% to 275% for hours they work outside of their regular shifts, such as on weekends, public holidays, or late-night shifts.

However, if your employees don't fall under a Modern Award or enterprise agreement, penalty rates and overtime provisions aren’t an automatic requirement according to the National Employment Standards (NES). In cases such as these, it’s up to you to establish these rates in your employees' individual employment contracts. Without specific contractual terms for overtime or penalties, the only obligation is for you to pay the base minimum wage.

Ensure your contracts and agreements clearly outline entitlements to avoid any confusion or legal risks. Always review award-specific requirements or negotiate terms directly with employees if they're award-free.

Compliance obligations for employers

The Fair Work Ombudsman investigates wage complaints and non-compliance. Failure to meet your obligations can result in big fines, back payments to employees, and in severe cases, legal action. As such, maintaining compliance is key. Below, you can find a list of the major obligations for employers when it comes to minimum wages for Australian workers:

Pay the correct minimum wage: Ensure you pay all employees at least the national minimum wage or the relevant Modern Award rate, based on their employment status and classification.
Casual loading: Pay casual workers the required 25% casual loading on top of their hourly rate to compensate for the lack of paid leave entitlements.
Maintain accurate records: Keep detailed records of wages, hours worked, and entitlements for all employees for at least seven years to comply with the Fair Work Act 2009.
Provide payslips: Issue payslips within one working day of payment, clearly showing wage details, deductions, and any extra rates like overtime or penalties.
Update wages annually: Adjust wages when the Fair Work Commission announces minimum wage increases, typically effective from 1 July each year.
Adjust for junior employees, apprentices, and trainees: As these employees' minimum wages increase as they age or progress through their training, it's essential you ensure timely wage adjustments.
Pay out of accrued entitlements: When an employee's employment ends, you must pay out accrued entitlements, such as leave, based on the current minimum wage and applicable award rates at the time of termination.

Rippling: Your solution for seamless minimum wage compliance

As we’ve covered, staying compliant with minimum wage laws is imperative for avoiding penalties and ensuring fair treatment of employees. With changes often occurring on 1 July each year after the Fair Work Commission's annual wage review, it’s essential to remain informed.

Managing these updates and ensuring compliance with payroll, overtime, and penalty rates can be complex. However, Rippling simplifies the process, helping you manage wage calculations, track entitlements, and integrate any necessary updates seamlessly into your payroll system. This allows you to focus on running your business, free from the stress of manual compliance tracking.

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