In June 2024, the Shop, Distributive and Allied Employees’ Association (SDA) applied to the Fair Work Commission (FWC) for an increase to the minimum wages for ‘junior employees’ in three awards (junior pay rates).
What is changing?
The FWC has decided on the SDA’s application and has announced that it will remove junior pay rates for some employees under the following awards:
- General Retail Industry Award 2020;
- Fast Food Industry Award 2020; and
- Pharmacy Industry Award 2020.
Once the decision takes effect, employees who are between 18 and 20 years old will be entitled to the full adult pay rate after they have been working for that employer for six months. However, as discussed further below, the FWC is proposing a transitional period.
There will not be any changes to pay rates for employees who are under 18 years old or for employees with less than six months experience with an employer.
Current junior pay rates
The three awards provide that ‘junior employees’ are entitled to a lower minimum rate than the adult pay rate. The rate varies depending on the worker’s age — an employee who is 18 years old is entitled to 70% of the adult rate, those aged 19 to 80%, and those aged 20 to 90%.
When will the change take place?
The Commission has expressed a provisional view that the removal of the junior pay rates should be done incrementally. The FWC stated that:
“We also consider this change should be introduced gradually over a period of up to four years, with a view to smoothing potential impacts on young people and the businesses that offer them employment opportunities.”
The FWC’s draft determinations provide for phasing in the removal of junior pay rates for 18 to 20 year olds from the three awards by increasing each junior pay rate by five percentage points approximately every six months, until each junior pay rate reaches parity with the adult pay rate. The exception is that, under the General Retail industry Award 2020, the junior pay rate for 20 year olds with more than six months service will go straight to the adult rate.
The FWC’s provisional view is that these changes should begin on 1 December 2026.
However, before any change is made to these awards, the FWC will hear submissions from parties on the method of implementing its decision.
There are other awards with junior pay rates for 18 and 19 year olds. For example, the rate under the Storage Services and Wholesale Award 2020 for 18 year olds is 70% of the adult rate, and the Amusement, Events and Recreation Award 2020 award rate for 18 year olds is 75% while the 19 year old rate is 85%. It may only be a matter of time before an application is made to extend the new junior rates to all other awards.
Impact on businesses
Businesses that hire employees who are currently paid at the existing junior pay rates should anticipate that these changes will commence on 1 December 2026.
To ensure compliance with any changes to these awards, each business should ensure that it knows any junior employee’s date of birth. As foreshadowed by the FWC, it is likely that the changes to the junior pay rates will vary depending on the age of an employee.
Businesses should also be familiar with each employee’s commencement date, as these changes will only impact workers who have been with an employer for longer than six months.
Contact us
If you have any questions on the FWC’s decision to remove junior pay rates and how it will impact your business, please contact a member of the Workplace Relations team.
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