Every employee working in Australia is entitled to a minimum wage, the lowest amount an employee can legally be paid. The national minimum wage for a person aged 21 or older (at October 2020) is $753.80 a week, for a 38-hour week, or $19.84 an hour, before tax. Employment awards usually set a minimum wage for an industry or occupation, but wages and entitlements can depend on age, industry, qualifications, experience, work hours, and work duties and responsibilities.
Who decides minimum wages?
Under Section 289, every person must have a reasonable opportunity to make and comment on submissions. The commission must publish all submissions, unless a submission is deemed commercially sensitive.
Under Sections 290 and 291, the commission can order investigations and conduct research for the review. If it does conduct research, it must publish that research so submissions can be made about issues raised.
At the end of the review, a national minimum wage order is made which applies from the first full pay period on or after July 1 each year.
Special minimum wages
Some employees have special minimum wages set by the order, such as employees with a disability, juniors, apprentices and trainees.
Employees with a disability
Special minimum wage 1 applies to employees with a disability whose disability does not affect their productivity. The employee must be paid a minimum wage equivalent to that of an employee without a disability.
Special minimum wage 2 applies to employees with a disability who cannot perform the required duties of a position because of the effects of their disability, and who meet the impairment criteria to receive the Disability Support Pension.
Employees are paid a percentage of the minimum wage based on their assessed capacity. If the assessed capacity of the employee is 10%, the wage will be 10%; if the assessed capacity of the employee is 20%, the wage will be 20%. This pattern continues up to 90%. An employee cannot be paid less than $89 a week.
Special minimum wage 3 applies to employees aged up to 20. These employees are paid a percentage of the minimum wage based on their age.
Employees aged under 16 are paid 36.8%, 16-year-olds 47.3%, 17-year-olds 57.8%, 18-year-olds 68.3%, 19-year-olds 82.5%, and 20-year-olds 97.7%.
Special minimum wage 4 applies to apprentices. It is the base rate of pay set by clause 15.1 of the Miscellaneous Award 2020 plus 1.75%.
Special minimum wage 5 applies to those in a training arrangement who are not apprentices. It is the base rate of pay set by clause 15.2 of the Miscellaneous Award 2020 plus 1.75%.
Piece rates and commission payments
Some awards allow employers to set specific pay arrangements, such as the payment of piece rates or commission instead of an hourly or weekly pay rate.
A piece rate means an employee is paid per item harvested, packed or produced. This can occur when an award or agreement allows for such payments or when the employee is not covered by an award or agreement and can be paid according to how much work they do.
A commission payment means the employee is paid a rate as a fee or percentage of sales they make. The payment can make up the employee’s whole wage or be paid in addition to a wage. An employee can be paid commission only when an award or agreement states this.
The Fair Work Ombudsman investigates suspected violations and breaches of a national minimum wage order.
Following several high-profile cases of the underpayment of employees by companies, the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 was implemented. It made several key changes to laws relating to the underpayment of workers, including:
- significantly greater penalties for “serious contraventions” of workplace laws. The penalty can be up to $133,200 per contravention for an individual and $666,000 per contravention for companies.
- introducing a reverse onus of proof on employers who do not meet record keeping or pay-slip obligations, so that employers must provide proof they paid an employee correctly.
- holding some franchisors and companies responsible for breaches of workplace laws by franchisees or subsidiaries.
For advice or representation on any legal matter, please contact Armstrong Legal.