Minimum Wage in Australia - Frequently Asked Questions
Is there a separate legislation relating to minimum wages in Australia?
There is no separate legislation on minimum wages in Australia but there are statutory minimum wages which are regulated by the Fair Work Act, 2009. Part 2-6 of the Fair Work Act 2009 deals explicitly with minimum wages. Any determinations made to vary minimum wages in modern awards or a national minimum wage order will apply from the first full pay period on or after 1 July each year.
Do one or more minimum wages exist that is/are determined by law?
According to Section 135(2), 206, 285, 294 of the Fair Work Act (FWA), more than one Minimum wage exists depending upon the industry and occupation categories. There are currently three categories of minimum wage: 1) modern award minimum wages, which are industry-specific 2) the national minimum wage, which is used as a 'safety net' and is of general application to all industries and occupations; 3) the special national minimum wage, which applies to specified categories of vulnerable workers, like junior employees, trainees and employees with a disability.
At what level is minimum wages determined?
According to Section 283 (a) (b) there is a provision of national minimum wage rate which applies to employees who are not covered by any modern awards or enterprise agreements. In Section 132 of the Fair Work Act (2009), modern awards set the Minimum terms and conditions (including the minimum wage) of employees in particular industries or occupations. Moreover, within certain industries or occupations, modern award minimum wage rates vary with the levels of skills.
On what basis is minimum wage calculated?
Minimum wages are calculated on an hourly and weekly basis. The 2012-13 Annual Wage Review Order issued by the Fair Work Commission stipulates that the national minimum wage is $622.20 per week, calculated on the basis of a week of 38 ordinary hours, or $16.37 per hour. Different rates apply to employees covered by the Western Australian industrial relations system. Contact Wageline for more information.
In case of weekly/monthly minimum age, are they based on any fixed number of hours?
According to Sections 20 and 62 of Fair Work Act 2009, working hours of full time employees should not be more than 38 hours per week. However, it can be less for part-time workers.
Are governmental bodies, employer and/or trade union representatives involved in minimum wages setting?
Fair Work Australia is responsible for setting the minimum wages for employees in the national workplace relations system. Each financial year Fair Work Australia's Minimum Wage Panel (the Panel) conducts an annual wage review and issues a decision and a national minimum wage order for award and agreement-free employees. The Minimum Wage Panel consists of 7 people. 4 are from FWA, including the Chair who is the President of FWA. The other 3 are experts from business, unions and academia.
How are upratings (adjustments) of minimum wages decided upon?
The Minimum Wage Panel decides the national minimum wage and the minimum wages for each of the awards after consultation with industry, unions, individuals as well as the state and federal governments. The decision is then incorporated in the changes to modern awards whose administration is carried out by either the States' or the Federal Tribunal depending on the employer and/or the category of employees.
What are the components of minimum wages in Australia?
The national minimum wage is a base rate of pay for part time and full time adult employees. For casual workers additional loadings apply (currently 24%). For juniors, apprentices, trainees and employees with disabilities affecting their productivity, different minimum rates apply. Workers covered by an award or enterprise agreement may be eligible for different rates, and may also qualify for additional loadings for shift work and overtime - it is important to check the conditions outlined in the instrument which applies. Different rates apply to employees covered by the Western Australian industrial relations system. Contact Wageline for more information.
How frequently is the fixed component of minimum wage updated?
The national minimum wage is reviewed annually.
What is/are the yardstick/s on which minimum wage upratings are based?
The range of criteria on which minimum wage upratings are based is broad. The objective of the National Minimum Wage is to "establish and maintain a safety net of fair minimum wages, taking into account: (a) the performance and competitiveness of the national economy, including productivity, business competitiveness and viability, inflation and employment growth; (b) promoting social inclusion through increased workforce participation; (c) relative living standards and the needs of the low paid; (d) the principle of equal remuneration for work of equal or comparable value; (e) providing a comprehensive range of fair minimum wages to junior employees, employees to whom training arrangements apply and employees with a disability" (Section 284 of Fair Work Act 2009).
In addition, the objective of the 'modern award' is to "ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into account: (a) the relative living standards and the needs of the low paid; and (b) the need to encourage collective bargaining; and (c) the need to promote social inclusion through increased workforce participation; and (d) the need to promote flexible modern work practices and the efficient and productive performance of work; and (e) the principle of equal remuneration for work of equal or comparable value; and (f) the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; and (g) the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards; and (h) the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy" (Section 134, Fair Work Act 2009).
What is National Poverty line?
How is minimum wages compliance regulated?
The Fair Work Ombudsman regulates compliance. The Fair Work Ombudsman is a statutory office created by the Fair Work Act 2009. The Fair Work Ombudsman’s jurisdiction is set out in the Fair Work Act, and operates independently of Government, making their own decisions about all investigations. Different processes apply to employees covered by the Western Australian industrial relations system. Contact Wageline for more information.
Which legal sanctions can be applied in compliance is lacking?
There are a variety of possible outcomes, depending on the investigation carried out by FWA. In some instances, employers might have simply been unaware of being in breach of the legislation. In these cases employers promptly collaborate with FWA. In others, litigation occurs and compliance includes fines, payment of arrears with interests, letter of apology and publication on major newspapers. (The list of current and past litigation cases is at http://www.fairwork.gov.au/about-us/legal/pages/current-cases.aspx and sub-link within that page).
Are sanctions often being applied?
There are no statistics on how frequent sanctions are applied.
Are employer and/or trade union representatives involved in compliance procedures?
FWA inspectors work with employers and employees on their cases.
To whom/Where can individuals complain, if they think they are earning less than minimum wage?
The Fair Work Ombudsman regulates compliance. The Fair Work Ombudsman is a statutory office created by the Fair Work Act 2009. The Fair Work Ombudsman’s jurisdiction is set out in the Fair Work Act, and operates independently of Government, making their own decisions about all investigations. It is also possible for employees to undertake legal proceedings independently to recover overdue amounts. In Western Australia, employees should contact Wageline.