Your Guide to Minimum Pay as an Employer
Not sure how much to pay your employees? Learn here about the various base rates that underpin your employee's pay.
Your employees’ pay is likely to be a significant proportion of your business’s expenses. Unlike some other aspects of your business, there are legal baselines dictating the minimum you can pay on your employees. Read on to find out the main factors that influence what you can pay your employees.
National Minimum Wage
The national minimum wage is the lowest that you can pay your employees in Australia. The Fair Work Commission sets the minimum rate and is currently $18.93 per hour. This rate applies to both full-time and part-time workers, and changes every year on July 1st. Furthermore, you are required to pay an additional 25% if your employees are casual employees. Moreover, if your employees are eligible for superannuation, you will have to pay them super on top of their wages.
A ‘Modern Award’ specifies the minimum pay and conditions that you can pay and applies on an industry basis. Modern Awards apply to specific industries, and if covered then you will have to follow the award. The Fair Work Commission’s tool can help you figure out if your industry is covered by a Modern Award.
Alternatively, if covered by an enterprise agreement such as a collective or greenfields agreement, then the minimum wage will be set out in the agreement. Enterprise agreements are established by negotiation of employers and their employees. They can give you greater flexibility for pay than a Modern Award. However, the agreement must meet the ‘better off overall test’. This means that your employees must be better off with the enterprise agreement than the respective Modern Award.
At the end of the day, the employment contract you have with an employee will establish the minimum rate of which you can pay them. Therefore you should use the minimum rate of pay as a guide to what you should pay your employees. If your industry requires highly specialised individuals, you will likely have to pay more to attract and retain talent. Keep in mind, that pay is not the only way to attract talent or reward your employees. An engaging work culture or interesting work can assist you to attract skilled employees while keeping your costs down.
By knowing the minimum rate you can pay your employees, you can ensure that you pay your employees legally for their work. Moreover, you will also have to comply with employment conditions such as leave entitlements in addition to minimum rates of pay. If you are unsure about whether you are paying your employees correctly, get in touch with an employment lawyer for legal advice.
Unsure where to start? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest legal marketplace.
Lachlan is an intern at Lawpath as part of the content team. He is currently studying a Juris Doctor at the University of Sydney. Lachlan has a keen interest in corporate law and commercial litigation.