Lots of modern awards and enterprise agreements have junior rates of pay typically applying to workers who are under 20 or 21 years of age who don’t get a full adult wage for the work that they do. In a landmark decision, the Fair Work Commission has decided that that has to change for at least some of them.

About the case

On 6 June 2024, the Shop, Distributive and Allied Employees’ Association (SDA) applied to change junior rates, seeking to increase rates of pay for employees aged 20 years old and under in the following 3 awards:

• Fast Food Industry Award 2020
• General Retail Industry Award 2020
• Pharmacy Industry Award 2020

Part of the rationale behind the application is that employees who are 18 years or older should receive full adult rates because they are treated as adults in so many other aspects of law and life. For example, when you reach 18 years of age, you can legally:

• Vote in elections (you must enrol with the Australian Electoral Commission)
• Stand for public office (with some age limits for certain roles)
• Serve on a jury if called
• Be treated as an adult in the legal system (no longer a minor)
• Enter into legally binding contracts (leases, loans, phone plans, etc.)
  
• Open and control your own bank accounts and finances independently
• Buy and consume alcohol legally
• Purchase tobacco products
• Enter licensed venues like pubs and clubs without a guardian
• Apply for a full (unrestricted) driver licence (after meeting state requirements)
• Travel independently and apply for an adult passport
  
• Get married without parental consent
• Make your own medical decisions
• Create a will
• Be fully responsible for debts and legal obligations

It is a fairly compelling argument.

About the decision

The Full Bench has decided that:

• after 6 months’ experience, the rates payable to adult junior employees will be set at a rate of 100% of the full adult rate of pay
• the current percentage rates for adult junior employees with less than 6 months’ experience with their current employer will stay the same
• there will be no change to junior rates for persons aged under 18.

About implementation

The Full Bench has proposed that the decision be implemented in phases through a series of adjustments of 5% made on and from 1/12/26, 1/7/27, 1/12/27, 1/7/28, 1/12/28 and 1/7/29 with the effect of:

• The rate for 20 year olds going from the current 90% to 100% on 1 July 2027
• The rate for 19 year olds going from the current 80% to 100% on 1 July 2028
• The rate for 18 year olds going from the current 70% to 100% on 1 July 2029

The Full Bench has called for submissions on the proposed implementation method but we see little likelihood of it changing and confirmation should be expected in the not too distant future.

Thoughts?

We have a few:

1. As noted above, an employee who is in their first 6 months of employment is not eligible for these increases. So it would appear that the junior rates for 18 to 20 year olds will stay in the awards and it will be put to employers to increase their wages to the adult rate once they complete six months service. Just one extra layer of complexity and another administrative task to deal with.
2. These increases will of course apply on top of award wage increases from Annual Wage Reviews that take effect from 1 July each year which will mean a double whammy of those increases and the Adult Junior adjustments from the same date in the next 3 years.
3. Now that this decision has been made, we can expect a raft of applications to vary every other award with rates for juniors or unapprenticed youths and that these adjustments will flow fairly automatically to those other awards.
4. For female dominated industries where award rates have recently been increased significantly on work value and gender equality grounds and there are junior rates (eg in the Children’s Services Award 2020), there is a compounding effect.
5. Other award variations are likely to be necessary eg with adult apprentices which are based on the premise that an adult is at least 21 years old.
6. The next test case might perhaps be on rates for trainees and apprentices – we will have to wait and see,
7. If you have an enterprise agreement with junior rates in it, you will need to prepare to change that in your next agreement because the Better Off Overall Test will require that. 

If you need a hand working through what this all means for your business, send us a message through the “Tell us what you need help with” form below.