All employees in Australia are entitled to a minimum wage. The minimum wage that is applicable to the employee will be dependent on whether they are award or agreement covered, and if so, which award or agreement applies. 

If they are award or agreement covered, their minimum wage will then depend on their classification under that industrial instrument.

If the employee is an ‘award-free’ employee, they will still be entitled to at least the National Minimum Wage, which is prescribed through the National Minimum Wage Order, handed down each year by the Fair Work Commission’s panel, following their Annual Wage Review.  

The decision from the Annual Wage Review, and the subsequent Order, ordinarily come in to effect on 1 July each year. However, for pragmatic reasons, the Minimum Wage Order normal specifies that the increase take effect from the first full pay period on or after 1 July. In other words, if you are mid-pay period on 1 July, the new rates will not take effect until the next pay period.

In reaching its decision each year, the Annual Wage Review’s expert panel considers written submissions from interested organisations and individuals, consultations from expert witnesses and research commissioned by the panel. 

The minimum wage order, when given each year, has effect on modern award minimum wages, and the national minimum wage for award-free employees.

Where a modern award minimum wage is applicable to an employee, that award minimum wage operates as an enforceable safety net in respect of those employees. In other words, irrespective of any other contractual arrangement you may come to with your employee, that arrangement cannot result in the employee earning less than they are entitled to under the modern award.