On 6 June 2024, the Shop Distributive and Allied Employees’ Association (the SDA) lodged an application with the Fair Work Commission (the application) to vary the minimum rates for junior employees in the General Retail Industry Award 2020, the Fast Food Industry Award 2020 and the Pharmacy Industry Award 2020 (the relevant modern awards).

Currently, each of the relevant modern awards contain junior rates of pay for employees under the age of 21 years, although the specific rates differ slightly between each award. 

The application (which is supported by the ACTU) seeks to vary the relevant modern awards such that the junior rates are removed for employees who are 18 years or older from each award and replace the current junior rates with higher junior rates of pay.

The application proposes the following arrangement:

  • for workers who are 16 years of age and under – 50% of the applicable rate of pay (the current rates are 40-50%);

  • for workers who are 17 years of age – 75% of the applicable rate of pay (the current rates are 60%); and

  • for workers who are 18 years of age and over – 100% of the applicable rate of pay.

What does this mean?

The application is intended to address the pay disparity between young employees and their older co-workers by abolishing junior rates (for employees aged 18 and above) and to reduce the pay differential between employees under 18 years of age and adult employees.

Currently, workers under 21 years of age (for the Fast Food Industry Award and the Pharmacy Industry Award) are paid a percentage of the adult rate of pay. In respect of the General Retail Industry Award, employees who are 20 years of age and who have been employed by the employer for more than six months are entitled to be 100% of the applicable rate of pay.

If the SDA’s application is successful and the Fair Work Commission determines to vary the relevant modern awards as set out above, this will mean that for workers who are 18 years and over, they will be entitled to the full adult rate of pay.

For example, currently an 18-year-old who is classified as ‘Fast Food Employee level 2’ is entitled to be paid $19.02 per hour, and by comparison, a 21-year-old doing the same role is entitled to receive $27.17 per hour under the Fast Food Industry Award. If the application is successful, this would mean that both the 18-year-old and the 21-year-old would be entitled to receive the same amount of pay when performing the same role under that modern award.

Before the Fair Work Commission is permitted to make any variation to a modern award minimum wage it must be satisfied of the requirements under section 157 of the Fair Work Act, including that the variation is justified by work value reasons and the making of the variation outside the system of annual wage reviews is necessary to achieve the modern awards objective.

What has occurred so far?

Following a directions hearing on 1 July 2024, the Fair Work Commission issued directions which require the SDA (and any other party supporting the application) to file their materials by 29 October 2024. Any party wishing to oppose the application will be required to file reply materials by 11 March 2025. A further directions hearing will then be held on 21 March 2025, with a likely hearing to be fixed for dates thereafter.

Our involvement

Australian Business Lawyers & Advisors (ABLA) appeared on behalf of Business NSW and Australian Business Industrial at the directions hearing on 28 June 2024. ABLA will be liaising with Business NSW and ABI members to consider the potential practical effect of this application. ABLA will be filing reply submissions as well as evidence.  

If the application is successful, it will have a material financial impact on businesses, and will likely make the hiring of young people less attractive. It also removes the existing structural incentive for employers to invest in the training and development of new entrants to the workforce. This has the potential to have significant adverse implications for the workforce participation rates of young people.

As the matter progresses, we will provide further updates. However, if you have any feedback or wish to discuss this matter, please get in touch with our team.

More information on the Junior rates application (AM2024/24) matter can be accessed on the Fair Work Commission website.