Minimum wages and award rates¶

Every employee has a minimum amount they must be paid for their work. But where does that minimum come from? For most Australian employees, the answer is either the national minimum wage or the minimum rate set by an award or agreement.

This lesson explains the difference, and shows you where to look up the rate that applies right now — without relying on a figure that goes out of date.

In one line

Pay rates come from the national minimum wage or from an award or agreement, and Fair Work reviews them each year with changes usually starting on 1 July.

Why this matters¶

Paying below the correct minimum is one of the most common — and most costly — payroll errors. The minimums change every year, so a rate you used last year may be too low this year. Knowing where the rate comes from, and how to check the current one, is the safest way to get pay right.

What you will learn¶

Where an employee's minimum pay rate comes from
The difference between the national minimum wage and award rates
How to find the current rate using Fair Work's tools

Understanding the concept¶

An award is a legal document that sets the minimum pay and conditions for a particular industry or type of job. Most Australian employees are covered by an award. Fair Work explains that an award sets minimum pay rates for full-time, part-time and casual employees, along with allowances and penalty rates.

Some workplaces instead have an enterprise agreement — an agreement made at a specific workplace that sets its own minimum rates, which cannot be less than the award would give.

The national minimum wage is the base rate that applies to employees who are not covered by any award or agreement. It acts as the floor for those employees.

So the minimum rate for a given employee comes from one of these:

the award that covers their industry or job, or
an enterprise agreement at their workplace, or
the national minimum wage, if no award or agreement applies.

Each year the Fair Work Commission runs an annual wage review. It reviews both the national minimum wage and the minimum rates under awards. Fair Work explains that any changes usually start from the first full pay period on or after 1 July. That is why pay rates so often change at the start of July.

Because the rates change every year, this lesson does not quote a dollar figure. To find the current rate, use Fair Work's Pay and Conditions tool (also called the Pay Calculator), or download the pay guide for the relevant award. Fair Work explains that these are updated with the new rates each year and show the minimum rates, allowances and common penalty rates for each classification.

For accountants & bookkeepers

The relevant award depends on the employee's role and the business's industry, and the correct classification within the award drives the base rate that penalties, loadings and many allowances are built on. Fair Work's pay guides and the Pay and Conditions tool are the authoritative reference and are refreshed after each annual wage review. Rates for some awards have, in past years, been phased in on different dates, so always confirm the operative date rather than assuming 1 July.

Example¶

Jordan runs a small retail shop and hires a casual assistant. To work out the correct minimum pay, Jordan first identifies the award that covers retail work, then finds the assistant's classification within it. Jordan opens Fair Work's Pay and Conditions tool, selects the award and classification, and reads off the current minimum hourly rate, plus any penalty rates for weekends.

A year later, after the annual wage review, Jordan checks the tool again before the first July pay run — because the rate may have gone up from 1 July. Jordan never relies on last year's figure.

Common mistakes¶

Assuming everyone is on the national minimum wage — most employees are covered by an award with its own, usually higher, rates.
Using last year's rate — the minimums are reviewed each year and usually change on 1 July.
Forgetting that an enterprise agreement can set the workplace's own minimum rates.
Picking the wrong award or classification, which leads to the wrong base rate.

How this works in myaccountant¶

In the app — when you set up an employee, you enter the pay rate that applies to them, and myaccountant uses that rate when it works out each pay run. The app does not choose an award or set the legal minimum for you, so you confirm the current correct rate with Fair Work's Pay and Conditions tool, then enter it in the employee's setup. When rates change, you update the rate in the employee's setup and it flows through to the next pay run.

Key points¶

An employee's minimum pay comes from an award, an enterprise agreement, or the national minimum wage.
Most Australian employees are covered by an award.
The national minimum wage is the floor for employees not covered by an award or agreement.
Fair Work reviews the rates each year, and changes usually start on 1 July.
Rates change every year, so always check the current figure — do not rely on memory.
Use Fair Work's Pay and Conditions tool or the award pay guide to find the current rate.

Learn next¶

General information only — not tax, super or financial advice.

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