Australia has a minimum wage, and every employee working in Australia needs to be paid at least this amount.
The main purpose of minimum wage in Australia is to ensure fair compensation for workers across different industries. The minimum wage in Australia is determined by the Fair Work Commission, which undergoes a systematic annual review.
This guide aims to provide a comprehensive overview of the Australian minimum wage, the recent updates, and the impact of minimum wage on employees and the economy.
Minimum Wage- What Is It?
In simpler words, the minimum wage refers to the lowest amount you will be paid for the work you do. It is the gross pay before tax, and it does not include additional entitlements such as casual loading, allowances, bonuses, and penalty rates. These must be paid by the employers on top of the minimum wage.
This brings us to our next question: what is the current minimum wage in Australia?
The current national minimum wage is $23.23 per hour in Australia or $882.80 per 38-hour week at the time of writing. Australian minimum wage is one of the highest minimum wages all across the globe. Still, for most jobs, minimum wage is determined by the role, industry and age. As a result, one may be entitled to more or less than the national minimum wage.
How Are Minimum Wages Set?
The majority of minimum wages are set in a job’s award or agreement. Let’s look at both of these.
Conditions like meal or rest breaks, along with minimum wages for an industry or occupation, are outlined by the Awards.
Award pay rates tend to differ as per the responsibilities and skills involved. These rates are usually higher than the national minimum wage. An employer can be covered by more than one award.
Another way to set minimum wage is by registered agreements, which set out employment conditions for a specific employer or company.
It is worth noting that if an employee has been covered by a registered agreement, he or she will not be covered by an award. In this case, the minimum wage can’t be lower than that of the appropriate award.
An employee who is not covered by an award or agreement and earns piece rates has to be paid at least the national minimum wage. What are piece rates? Piece rates are when an employee is not paid an hourly or weekly wage but in commissions or by results.
Minimum Wages In Australia For 2023
This depends on the type of employment of the Australian worker, their age and if they are covered by an award or registered agreement. The following are some of the criteria for minimum wages in Australia.
National Minimum Wage For Adult Australian
If you are 21 or above, and an award or registered agreement does not cover your work, the national minimum wage that applies to you are $23.23 per hour or $882.80 per week for a 38-hour week.
Workers who are under 21 usually get a percentage of an adult’s pay rate, which serves as their minimum wage. But, if the award or registered agreement does not set a minimum wage percentage for juniors, they may be entitled to complete adult minimum wage.
Junior employees who aren’t covered by an award or agreement get a percentage of the national minimum wage.
Let’s consider an example. You’re 17, just stepping into the workforce as a fast-food cashier, a role covered by the Fast Food Industry Award. As a Level 1 employee, your entitlement stands at 60% of the adult rate, currently $24.73, resulting in a minimum wage of $14.84.
Here’s where it gets interesting – your entitlement increases with age. At 18, you’re entitled to 70%. At 19, it bumps up to 80%, and this pattern continues until you hit 21, where you’re entitled to the full 100% of the minimum wage. Understanding these nuances is crucial for young workers as they embark on their employment journey.
Apprentices And Trainees
For apprentices and trainees, the pay rates may be less than the national or award.
Minimum wages for apprentices and trainees are affected by a range of factors, including;
- Location of work
- Age of the trainee or apprentice
- Stage of traineeship or apprenticeship
- Type of work performed
- Number of contracted hours
Apprentices might potentially receive pay increases as they become more skilled or over time.
Employees With A Disability
The Supported Wage System applies to workers who have a disability and have a reduced work capacity. The Supported Wage System rate is a percentage of the minimum wage for that specific role.
When it comes to minimum entitlements, part-time employees share the same benefits as their full-time employees; however, on a pro-rata basis, as per their working hours. This essentially means that part-time employees enjoy the same minimum pay rate per hour as their full-time peers in equivalent roles.
However, due to their reduced hours, part-time employees typically receive a lower overall income compared to full-time workers who work longer hours. Understanding this balance is essential for both employers and part-time workers to ensure fair compensation and transparency in the workplace for both employers and part-time workers.
Casual Minimum Wage
Casual employees often receive higher pay rates as they are not entitled to benefits like annual leave and paid sick leave. The total hourly rate of casual workers is made up of a fixed hourly rate of pay along with casual loading. Casual loading is typically 25%.
Casual employees earning the national minimum wage may receive a total hourly wage of $29.04 because of the $5.81 received as casual loading.
Impact Of Minimum Wage On Workers
The minimum wage serves as a crucial element in guaranteeing fair remuneration for workers. Not only does it provide a decent standard of living to the individuals, but it also protects them from exploitation as well.
A fair minimum wage not only mitigates income disparities but also enhances the overall welfare of workers and their families.
Impact Of Minimum Wage On The Country’s Economy
When it comes to setting a minimum wage, it is essential to consider the economic impact on businesses. Some critics have put forward the concern that with a higher minimum wage, businesses may feel burdened. As a result, the employment opportunities may be reduced.
Proponents, on the other hand, suggest that fair minimum wages stimulate consumer spending, reduce turnover and boost employee productivity, offering long-term advantages for not only the businesses but also the economy.
What is the minimum wage in Victoria?
In Victoria, the minimum hourly wage stands at $23.23, aligning with the national standard across the country. The National minimum wage serves a vital purpose in shielding workers from inadequate compensation.
Setting such minimum pay rates helps to make sure that the employers are properly sharing the profits that the employees helped to create.
Can an employee be paid less than the minimum wage in Australia?
No employee can be paid less than the applicable minimum wage in Australia. Still, different minimum wages may apply to workers who are below 21 years old.
How is minimum wage determined?
The Fair Work Commission determines minimum wages in Australia. The Fair Work Commission reviews the minimum wage every year and is also an independent body.
The panel of experts at the FWC considers multiple sources and materials such as written submissions from individuals and organisations, consultations with industry experts and some papers, research and studies.
A national minimum wage order is made at the end of the commission’s review. The new minimum wage becomes effective from the first full pay period commencing on 1 July.
What if I am being Underpaid?
If you think that you are being underpaid, the Fair Work Ombudsman has outlined recommended steps to take in such a case.
First, confirm the minimum pay under your award on the Fair Award website. After this, you should speak to your employer and then send an email to confirm what was discussed and any agreements that were reached.
Keep in mind the agreements need to be in writing, particularly regarding the time when backpay will be provided. In case your employer doesn’t respond to your requests for clarification, you should reach out to the Fair Work Ombudsman for assistance.
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