Where do minimum wages come from?

All Australian employees are entitled to a minimum wage. Follow our guide to understand where minimum wages and entitlements come from.

National Employment Standards

Let’s start with the National Employment Standards (NES). These 11 minimum entitlements apply to all employees in the Fair Work System. An award, employment contract or enterprise agreement?can't provide for conditions that are less than or exclude the NES: https://www.fairwork.gov.au/employment-conditions/national-employment-standards

Enterprise agreements

Enterprise agreements?are agreements covering employers and employees that set out minimum employment terms and conditions: https://www.fairwork.gov.au/employment-conditions/agreements

If an agreement applies to employees in a workplace, no award will apply to those employees. However:

• the base pay rate in the agreement can’t be less than the base pay rate in the award
• the?National Employment Standards?still apply
• any terms about?outworkers?in the award still apply.

Note: the Fair Work Act has been amended to include new enterprise agreement and bargaining laws. Learn about the new laws and when they start here: https://www.fairwork.gov.au/newsroom/news/secure-jobs-better-pay/enterprise-agreements-and-enterprise-bargaining

Awards (modern awards)

Modern awards are legal documents that outline the minimum pay rates and conditions of employment of employees they apply to. There are more than 100 industry or occupation awards that cover most people who work in Australia.

Awards apply to employers and employees depending on the industry they work in, their duties, level of responsibility and qualifications. Every award has information about who it covers. Use our Award Finder to work out what award applies to your employees in 3 easy steps: https://portal.fairwork.gov.au/find-my-award/

Awards don’t apply when an employer has an enterprise agreement in place.?Some employers are covered by more than one award due to the nature of their business and the jobs their employees perform. For example, a domestic construction business may be covered by the Building and Construction Award for their carpenters and bricklaying employees while their receptionist may be covered by the Clerks Award.

If you need help confirming award coverage, the Fair Work experts in our Employer Advisory Service can help: https://smallbusiness.fairwork.gov.au/employer-advisory-service

National Minimum Wage

The National Minimum Wage applies to employees not covered by an award or enterprise agreement and is reviewed each year by the Fair Work Commission: https://www.fairwork.gov.au/pay-and-wages/minimum-wages#national

Employees covered by an award or enterprise agreement are entitled to the minimum pay rates, including penalty rates and allowances in their award or agreement. These pay rates may be higher than the National Minimum Wage.

Employment contracts

An employment contract is an agreement between an employer and employee that sets out terms and conditions of employment. A contract can be written or verbal: https://www.fairwork.gov.au/employment-conditions/contracts

An employment contract can’t provide for less than the legal minimums set out in:

• the?National Employment Standards (NES)
• an award or enterprise agreement?applies
• the National Minimum Wage.

Do you have any questions about what applies to employees at your business? Let us know in the comments section ??