For compliance, competitiveness and workforce sustainability
If you’ve ever found yourself worrying about whether you’ve got pay right, you’re not alone. Pay rates, classifications, and entitlements are among the most common reasons employers contact us.
When setting pay rates, we recommend employers focus on five key areas to help ensure compliance, competitiveness, and workforce sustainability.
1.Determine the legal minimum rate first
The starting point is identifying whether an employee is covered by:
- A modern award
- An enterprise agreement
- The National Minimum Wage (if no award or agreement applies)
- Actual duties performed
- Level of responsibility
- Qualifications and experience
- Supervisory responsibilities
- Overtime
- Penalty rates
- Shift loadings
- Allowances
- Casual loading
- Annual leave loading (where applicable)
- Industry pay rates
- Local labour market conditions
- Skills shortages
- Competitor offering
For most Australian employees, the applicable award sets the minimum rate based on the employee’s classification, duties, and industry. Employers cannot pay below these minimums.
2. Check employee classification carefully
Many underpayment issues arise because employees are classified incorrectly. In fact, misclassification is one of the most common compliance risks.
At a café, for example, a junior casual food runner, a barista and a qualified cook might all be covered by the Restaurant Award, but they’ll likely sit at different classification levels, each with different minimum pay rates and entitlements.
When selecting the classification, employers should assess:
A higher classification generally attracts a higher minimum wage.
3. Include all pay-related entitlements
The hourly rate alone is not enough. Employers must consider:
An employee may appear to be paid above the minimum hourly rate but still be underpaid if these additional award entitlements are not accounted for.
4. Review market competitiveness
Compliance is the minimum standard, not necessarily the right business strategy.
Employers should benchmark against:
5. Monitor annual wage increases
The Fair Work Commission reviews minimum wages annually.
From 1 July 2026, the National Minimum Wage increased to $26.44 per hour ($1,004.90 per week), and modern award wages also increased. Employers should review payroll systems each year to ensure ongoing compliance.
