Workers aged between 18 and 21 should earn full adult wages under three popular industry awards, the Fair Work Commission (FWC) says, in a decision all but guaranteed to increase business wage bills nationwide.
The FWC on Tuesday handed down a landmark decision on ‘junior’ pay scales in the General Retail Industry Award 2020, the Fast Food Industry Award 2020, and the Pharmacy Industry Award 2020, which currently offer reduced pay to workers aged under 21 but over 18.
Under those awards, workers aged 16 and under earn less than half of what their adult counterparts make, with pay scales gradually increasing to 90% of full adult wages for workers aged between 20 and 21.
The Shop, Distributive and Allied Employees’ Association last year applied to vary those award rates, arguing workers aged 18 and over should earn full adult rates.
The Full Bench of the FWC largely agreed.
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It determined that workers subject to those awards should earn 100% of adult pay once they turn 18, so long as they have at least six months of experience with the same employer.
In making the decision, the FWC said it considered “extensive” evidence about the work conducted by workers aged between 18 and 21, and the conditions under which it is performed.
“In the case of young adults, we do not consider we can simply assume that they are materially less productive than workers older than them, especially in the lower classifications,” the FWC said in its full decision.
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To prevent employers from instantly facing a major increase to their wage bills, the FWC proposes a gradual increase to pay scales for workers aged 18 and up.
Under that plan, pay rates for workers aged between 18 and 21 would increase from current levels towards 100% by 5% increments, every six months, beginning on December 1, 2026.
That provisional timeline will be subject to further consultation.
Scales remain for experience, workers under 18
Notably, young adult workers with less than six months of experience at the same employer will face the existing pay scale.
This means inexperienced workers under the relevant awards, aged 18, 19, and 20, will face 70%, 80%, and 90% of full adult pay, respectively.
And pay scales for workers under 18 will stay as-is.
Explaining its decision to retain the pay scale for minors, the FWC accepted that “minors’ work value was likely less having regard to factors relating to maturity, life experience, and opportunity to have obtained work experience”.
It also considered arguments that making it more expensive to hire minors would likely convince employers to simply hire older, more experienced workers, depriving young Australians of early work experience.
The risks to young Australians “if they failed to participate in either employment, education or training, outweighed considerations in favour of variation,” said the FWC.
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In a statement, Australian Retail Council CEO Chris Rodwell said the decision would impose extra wage pressure on employers.
“The reality is, this decision does add another layer of cost at a time when many retailers are dealing with a cost-of-doing-business crisis,” he said.
But Rodwell welcomed the decision to keep junior rates for workers under 18 in place.
“Early work experience is critical, and we cannot afford to make it harder for young Australians to get their first job,” he said.
Others feared the decision would limit job opportunities for young adults.
“Junior rates recognise that young workers are often new to the workforce and still developing skills,” said Australian Chamber of Commerce and Industry CEO Andrew McKellar.
“Removing them reduces the incentive for businesses to give young people a start.”
The Shop, Distributive and Allied Employees’ Association, which first applied to vary the awards, welcomed the changes.
“This is a landmark decision, up there with the introduction of equal pay for women in the 1970s,” said national secretary Gerard Dwyer.
