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Junior Pay Rate Changes What Small Businesses Must Know
Disclaimer: This article is intended for informational purposes only and does not constitute legal advice. Small business owners are encouraged to consult with legal professionals for advice specific to their circumstances.
Published: 17/10/2024
Small business owners, particularly those in industries like retail, hospitality, and fast food, should be aware of potential changes to junior pay rates that could significantly impact staffing costs. A push by the Shop, Distributive and Allied Employees’ Association (SDA) to abolish junior wage rates is currently under review by the Fair Work Commission, with the outcome potentially affecting more than 500,000 young workers across Australia.
Key Dates and Process
The SDA lodged an official application on 6 June 2024, seeking to amend several industry awards to phase out junior pay rates for workers under 21 years of age. The Fair Work Commission is expected to consider this application in the coming months, with a decision likely to follow later in 2024. During this period, small business owners should stay informed about the proceedings, as any changes could affect wages and budgeting in 2025 and beyond.
What Changes Are Being Proposed?
Currently, junior workers are paid a percentage of the adult wage based on their age. For example, a 16-year-old worker earns 50% of the adult wage, while an 18-year-old earns around 75%. The SDA is seeking to amend these rates so that workers aged 18 and above are paid the full adult wage.
The proposed changes would affect several industry awards, including:
- General Retail Industry Award 2020
- Fast Food Industry Award 2020
- Pharmacy Industry Award 2020
The reform would involve removing the age-based wage reductions, meaning employees under 21 would earn the same as their older colleagues, irrespective of their age.
Industries and Businesses Affected
The proposed changes will primarily affect businesses in the retail, fast food, and pharmacy sectors, where a significant proportion of the workforce is under 21. Small business owners in these industries should evaluate the potential cost implications, as paying younger employees the full adult wage could lead to higher labour costs. The Australian Chamber of Commerce and Industry (ACCI) has warned that this could reduce job opportunities for young workers, as businesses may respond by hiring fewer young staff or reducing their hours.
What Small Business Owners Should Consider
Cost Impact: If the proposal is approved, small businesses will need to factor in the higher wage costs for junior workers. This may affect staffing budgets and could lead to adjustments in hiring practices, especially for businesses reliant on a large proportion of young employees.
Staffing Adjustments: Employers may need to consider whether they can continue to offer the same number of hours or positions to junior staff if wage costs increase. Businesses that heavily rely on junior employees to manage costs may need to review their workforce strategies.
Potential Hiring Changes: If the junior wage system is abolished, some businesses may consider hiring older, more experienced workers for the same rate. Small businesses should weigh the benefits and drawbacks of such changes in their hiring approach.
Preparing for Change: While a final decision is pending, small businesses should remain informed and prepare for potential adjustments. Business owners should keep track of the Fair Work Commission’s updates and consider reviewing their current staffing costs and budgets ahead of time.
The SDA's push for reform could significantly change the wage landscape for young workers. Small business owners in the affected sectors should be proactive in understanding these changes and planning accordingly for the potential impact on their business.
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For more information:
- Shop, Distributive and Allied Employees’ Association (SDA) Application - SDA Application Document
- ACTU seeks wage justice for young workers - ACTU Media Release
- Business push back on unions bid to abolish junior rates - The Nightly
- Union in push to end junior wages so workers get national minimum wage - ABC News Article
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