When expanding abroad, a cornerstone of so many aspects of a good start and positive long-term strategies is understanding salary benchmarks in a new market. Knowing the minimum wage in Australia and how that factors into future employees’ salary expectations can help or hinder employee satisfaction, job performance, and long-term retention.
Failure to provide employees with their minimum worker benefits, including a correct minimum wage, results in serious penalties in Australia. The government is currently debating amendments to the law that could see maximum penalties for wage theft (i.e. not meeting minimum wage requirements) increase to AUD 7.8 million in fines (or 3 times the withheld amount), plus up to 10 years in prison. That’s why INS Global offers all the support you need to understand local best practices and benchmarks in Australia.
What is the Minimum Wage in Australia?
Currently, the minimum wage in Australia is AUD 23.23 per hour or AUD 882.80 per week.
This applies to all work done by employees not covered by a registered agreement, special pay rate awards, or special working arrangements.
How the Minimum Wage Functions in Australia
The Fair Work Commission (FWC) is responsible for setting and reviewing the national minimum wage each year. The minimum wage was last amended in July 2023.
The FWC takes into account various factors such as economic conditions, living standards, and social needs.
Determining the Minimum Wage in Australia
The FWC conducts reviews to determine if the national minimum wage needs to be adjusted. They consider submissions from various stakeholders, including employers, unions, and other interested parties.
The minimum wage in Australia is reviewed each year, typically in July.
Minimum Wage by State
While the national minimum wage applies across the country, there can be variations in pay rates due to different Modern Awards and enterprise agreements in each state. In Australia, currently the only state with a minimum wage distinct from the national one is Western Australia.
In 2023, employees in companies not covered by Enterprise Bargaining Agreements (EBAs) in Western Australia are subject to the minimum wage of AUD 22.72 per hour or AUD 863.40 per week.
Exceptions and Adjustments
Modern Awards – In addition to the national minimum wage, many employees are covered by industry or occupation-specific Modern Awards. These are documents which include different (usually higher) workplace requirements depending on the industry, area, or company. Along with alternative minimum wages, modern awards may include requirements for flexible work hours, maximum weekly hours, or leave availabilities.
A list of existing awards can be found here.
Alternatively, employees with particular working relationships or contract types may be eligible for distinct minimum wages. These include:
– Apprentice and trainee pay rates
Determined according to the age, seniority, and industry of the apprentice/trainee.
– Junior pay rates
Younger workers (those between ages 16-20) are eligible for a reduced minimum wage according to their age. Currently, these pay rates vary between AUD 8.55 and AUD 22.7 per hour.
– Employees with disability pay rates
The government provides a supported wage system for employees with disabilities. This may affect the minimum wage they are eligible for, depending on how their disability affects their productivity. The minimum wage that an employee is entitled to is proportional to their productivity compared to a non-disabled employee, down a weekly minimum of AUD 102.
Penalty Rates
Penalty rates are additional payments for working weekends, public holidays, or overtime. The rates can vary depending on the industry and employment agreement.
Typically, employees who work on Saturday are paid 150% of their standard salary. For those who work on a Sunday this higher minimum salary increases to 200%.
Public holiday pay rates depend on the holiday and the industry of the employee. These can be found here.
Overtime pay in Australia is typically calculated as 150% for the first 2 hours, followed by 200% for every hour after that.
Tools for Determining the Applicable Minimum Wage in Australia
The Australian government provides tools and resources to help companies determine minimum salaries. The most applicable of these is the official government pay calculator:
Pay and Conditions Tool (PACT) – This tool on the Fair Work Ombudsman website helps calculate pay rates, including minimum wages and penalty rates.
Guarantee Compliance Worldwide with INS Global
INS Global is a company that provides global expansion and compliance services to help your company expand quickly, simply, and safely.
We help businesses ensure compliance with employment regulations and manage HR functions across different countries, including Australia. Expansion is a natural part of the growth process for many companies, it’s essential to conduct thorough research and possibly seek legal advice to ensure compliance with specific local regulations.
Our services include recruitment, payroll, compliance, and more, all provided through our local Employer of Record (EOR) in Australia. With the right expert support and robust local resources, we can give you an advantage during your critical transition period.
Contact our expert expansion advisors today to learn more.
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