Employment Law
Minimum Wage Australia: What Employers Need to Know
Getting wages right is one of the most fundamental obligations you have as an Australian employer. Underpayment — even if accidental — can result in massive penalties and reputational damage. This guide breaks down current rates, the annual review process, and exactly what you need to do to stay compliant.
What the Law Says
The Fair Work Act 2009 (Cth) establishes the national minimum wage as the absolute floor below which no employee can be paid. The Act empowers the Fair Work Commission (FWC) to set and review minimum wage rates annually through the Annual Wage Review.
Key legislative points employers must understand:
- Section 294 of the Fair Work Act requires the FWC to conduct an annual review of the national minimum wage and modern award minimum wages.
- Section 293 establishes the national minimum wage order, which sets the minimum rate for award-free and agreement-free employees.
- Modern awards set classification-specific minimum rates that sit above the national minimum wage for covered employees.
- Enterprise agreements can set their own rates but must pass the "Better Off Overall Test" (BOOT) against the relevant award.
Current Minimum Wage Rates (2024–25)
These rates came into effect from the first full pay period on or after 1 July 2024, following the FWC's Annual Wage Review decision of a 3.75% increase.
The 2024 increase represented a balance between cost-of-living pressures faced by low-paid workers and the capacity of businesses to absorb wage increases. The FWC considers submissions from employer groups, unions, the federal government, and economists before making its determination.
The FWC Annual Wage Review Process
Each year, the Fair Work Commission follows a structured review process:
- Submissions open(typically February–March) — employer groups, unions, and other interested parties lodge written submissions.
- Consultations and hearings(March–May) — the FWC expert panel hears oral submissions and considers economic data.
- Decision published(June) — the panel announces the new minimum wage rate and any modern award wage adjustments.
- New rates take effect(1 July) — from the first full pay period on or after 1 July.
What Employers Must Do
Staying on top of minimum wage obligations requires proactive management. Here are the practical steps every employer should take:
1. Identify the correct pay rate
Determine whether each employee is covered by a modern award, enterprise agreement, or the national minimum wage. Most employees fall under an award.
2. Check rates every July
Mark 1 July in your calendar. Review all employee pay rates against the new minimum wage and any updated award rates. Adjust pay before the first full pay period.
3. Review employee classifications
Ensure employees are classified at the correct award level. As employees gain skills and experience, they may need to be reclassified at a higher pay rate.
4. Include all minimum entitlements
Minimum wage is not just the hourly rate. Consider overtime, penalty rates, allowances, and loadings required by the applicable award.
5. Keep accurate records
Maintain detailed payroll records showing hours worked, rates paid, and any allowances. Records must be kept for 7 years under the Fair Work Act.
6. Provide payslips within 1 business day
Issue detailed payslips to employees within one business day of payment. Payslips must show the hourly rate, hours worked, and any deductions.
Common Mistakes and How to Avoid Them
Mistake: Paying the national minimum wage when an award applies
Fix: Award rates are almost always higher than the national minimum wage. Check which award covers each role and pay at least the correct award classification rate.
Mistake: Forgetting to update rates in July
Fix: Set a calendar reminder for June to review the FWC decision. Update your payroll system before the first pay run in July.
Mistake: Not paying casual loading correctly
Fix: Casual employees must receive a 25% loading on top of the base rate. This loading compensates for the lack of paid leave entitlements.
Mistake: Offsetting allowances against the base rate
Fix: Allowances and penalty rates are generally payable on top of the minimum rate, not instead of it. Check the specific award provisions.
Mistake: Misclassifying employees at a lower award level
Fix: Review job descriptions against award classification definitions regularly. As roles change, so should the classification level.
Penalties for Underpayment
The Fair Work Ombudsman takes underpayment seriously. Since 2024 wage theft reforms, the penalties have increased substantially:
For "serious contraventions" (deliberate and systematic underpayment), penalties can be up to 10 times these amounts. Additionally, from 1 January 2025, intentional underpayment of wages constitutes a criminal offence under amendments to the Fair Work Act, carrying potential imprisonment of up to 10 years.
Beyond financial penalties, underpayment can result in enforceable undertakings, compliance notices, infringement notices, public naming by the Fair Work Ombudsman, and significant reputational damage.
When to Get Professional Help
Consider engaging a qualified HR consultant when you:
- Are unsure which modern award applies to your employees
- Have received a compliance notice or audit request from the Fair Work Ombudsman
- Want to conduct a payroll audit to check you are paying correctly
- Are transitioning employees between awards or enterprise agreements
- Need to set up payroll systems that automatically update with new rates
- Have discovered a potential underpayment and need to rectify it
At Jordan Firme Business Consultants, we help employers conduct thorough payroll compliance audits, identify the correct award coverage, and build systems that keep you compliant year after year.
Frequently Asked Questions
As of 1 July 2024, the national minimum wage is $24.10 per hour or $915.90 per 38-hour week (before tax). This rate is reviewed annually by the Fair Work Commission and typically increases each July.
The national minimum wage is a safety net for employees not covered by a modern award or enterprise agreement. Most employees are covered by an award, which sets minimum pay rates that are usually higher than the national minimum wage for their classification level.
The Fair Work Commission conducts an Annual Wage Review and announces its decision in June each year. The new minimum wage rate takes effect from the first full pay period on or after 1 July.
Underpaying employees is a serious contravention of the Fair Work Act. Penalties can reach $93,900 per contravention for individuals and $469,500 per contravention for companies. The Fair Work Ombudsman actively investigates and prosecutes underpayment cases.
You can use the Fair Work Ombudsman's Find My Award tool at fairwork.gov.au or contact the Fair Work Infoline on 13 13 94. The applicable award is determined by the industry you operate in and the type of work your employees perform.
Casual employees receive a casual loading of 25% on top of the base minimum hourly rate to compensate for not receiving paid leave or other entitlements. This means the minimum casual rate is $30.13 per hour as of 1 July 2024.
Related Resources
National Employment Standards
All 11 minimum entitlements every employer must provide.
Fair Work Commission Guide
How the Fair Work system works for employers.
Employment Contracts Guide
What must be included and common errors to avoid.
HR Compliance Audit Tool
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HR Compliance Services
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