Payroll and HR

Minimum wage

What Is Minimum Wage?

The minimum wage is the lowest legally enforceable hourly, daily, or weekly rate that employers can pay their employees. It’s set and reviewed annually by the Fair Work Commission (FWC) and serves as a safeguard to ensure workers receive fair compensation for their labour.

In Australia, there are two key types of minimum wages:

  1. The National Minimum Wage, which applies to employees not covered by an award or enterprise agreement
  2. Award minimum wages, which apply to employees covered by a modern award relevant to their industry or occupation

What Is the Current Minimum Wage in Australia?

As of 1 July 2025, the National Minimum Wage is:

  • $24.95 per hour
  • $948 per week (based on a 38-hour workweek)

This base rate applies to adult employees not covered by an award or registered agreement.

However, most employees in Australia are covered by modern awards, which specify higher minimum pay rates based on the type of work, classification level, and employment type (e.g. casual, part-time, full-time).

Who Sets the Minimum Wage?

The Fair Work Commission conducts an annual wage review and decides whether the national minimum wage and award rates should be adjusted. This decision typically takes effect on 1 July each year and considers factors such as:

  • Cost of living
  • Economic conditions
  • Wage growth
  • Productivity
  • Employment levels

The commission’s goal is to balance the needs of employees with the economic realities for employers, especially small businesses.

Types of Minimum Wage Rates

Minimum wage rates can differ based on:

  • Employment status: Casual employees typically receive a casual loading (currently 25%) on top of the base hourly rate
  • Age: Junior employees (under 21) often have lower minimum wages
  • Apprenticeship/traineeship status: Special pay scales apply
  • Award classification: Specific roles within an award are graded into levels with corresponding pay rates

Example:
A Level 3 Retail Employee may earn more than a Level 1, reflecting their skills, experience, or responsibilities.

Employer Obligations Regarding Minimum Wage

Employers must:

  • Pay at least the applicable minimum wage for all hours worked
  • Apply any relevant penalty rates, overtime, or allowances as per the award
  • Provide accurate and timely payslips
  • Maintain correct payroll and timesheet records
  • Not deduct wages unlawfully or pay "cash in hand" below minimum standards

Failure to meet these obligations can result in penalties, back payments, and even legal action through the Fair Work Ombudsman.

Fair Work Ombudsman – Employer Obligations

Minimum Wage vs. Living Wage

There is often debate between the minimum wage and the living wage:

  • Minimum wage is legally set and enforced
  • Living wage is the estimated income required for a worker to meet their basic living needs (housing, food, healthcare, etc.)

Advocates argue that the living wage should be the benchmark to reduce working poverty, while critics caution that excessively high wage floors can burden small businesses.

How Microkeeper Helps With Minimum Wage Compliance

Microkeeper’s HR and payroll platform simplifies compliance with minimum wage laws by:

  • Automating award interpretation, ensuring correct base rates, penalties, and allowances
  • Keeping wage rates up to date with Fair Work reviews
  • Calculating casual loading, overtime, and public holiday rates
  • Generating compliant payslips and audit-ready payroll records
  • Offering real-time reporting on labour costs and earnings

Whether you're managing a retail team or a hospitality roster, Microkeeper helps ensure your staff are paid correctly and fairly every time.

Explore Microkeeper’s Award-Compliant Payroll Software

Common Questions About Minimum Wage

Does the minimum wage apply to casual workers?

Yes, but casual workers receive a higher hourly rate to compensate for lack of paid leave—this is called casual loading (currently 25%).

Can an employer pay below the minimum wage if the employee agrees?

No. Even if both parties agree, it is unlawful to pay below the legal minimum wage. Such agreements are void under the Fair Work Act.

What happens if I underpay my staff?

You may need to backpay the full amount owed, face fines from the Fair Work Ombudsman, and risk brand damage or legal claims.

How do I know which award applies to my employees?

Use the Find My Award tool from Fair Work, or consult an HR professional.

Final Thoughts

The minimum wage exists to protect workers from exploitation and ensure fair compensation across industries. For employers, keeping up with wage updates and compliance can be complex—but with tools like Microkeeper, staying compliant is easier than ever.

As the cost of living and regulatory expectations evolve, staying informed and leveraging compliant HR software ensures you don’t fall behind or make costly payroll mistakes.

Disclaimer: This glossary entry is for informational purposes only and does not constitute legal or financial advice. Always refer to the Fair Work Commission or a professional advisor for up-to-date guidance on wage obligations.