Most employees are covered by a modern award that sets the minimum pay rate, job classifications, penalty rates, overtime and allowances for their industry or occupation.
If no award or registered agreement applies, the National Minimum Wage is the floor — the least you can legally pay for ordinary hours.
Minimum pay rates usually change on 1 July each year, following the Fair Work Commission's Annual Wage Review. Always check the current rate for the year you are paying.
What a modern award is
Modern awards are legal documents that set out the minimum terms and conditions for employees in a particular industry or occupation. There are roughly 121 of them, and together they cover most of the Australian workforce.
An award sits on top of the National Employment Standards (NES). The NES sets baseline entitlements that apply to everyone — things like maximum weekly hours and leave — while the award adds industry-specific detail: minimum pay rates by classification, penalty rates, overtime, allowances, and rules about ordinary hours and rostering.
Awards don't apply to everyone. Some employees are covered by a registered enterprise agreement instead, and a smaller group is award- and agreement-free. But for the majority, finding the right award is the first step in working out lawful pay.
Find the right award and classification
Two Fair Work tools do most of the work. Use "Find my award" to identify which modern award applies — you answer questions about the industry and the employee's role, and it points you to the likely award. Then use the Pay and Conditions Tool (P.A.C.T.) to look up the actual pay rates.
The rate an employee is entitled to depends on their classification within the award. Classifications are based on the duties performed and the skill and responsibility involved — not on a job title someone gives themselves. Higher classifications carry higher minimum rates, so getting the classification right is what makes the number right.
Match each employee to a classification by reading the award's classification definitions against what the person actually does. Record the award and classification against the employee in your payroll system, so every pay run is anchored to a defensible minimum rate rather than a guess.
If no award applies — the National Minimum Wage
Where no modern award and no registered agreement cover the work, the National Minimum Wage applies. It is the absolute floor for award-free and agreement-free employees, set each year by the Fair Work Commission.
The National Minimum Wage is expressed as both a weekly and an hourly figure for ordinary hours. Casual employees who are award- and agreement-free are also entitled to a casual loading — generally 25% — on top of the base rate, in return for not receiving paid leave and other permanent-employee benefits.
Don't assume an employee is award-free just because you can't immediately name their award. Award-free is the exception. Run the role through "Find my award" first — many jobs that look uncovered are in fact captured by a broad industry award.
Penalty rates, overtime and allowances
The minimum hourly rate is only part of the picture. Awards also set penalty rates for weekends, evenings and public holidays, overtime rates for hours beyond the ordinary span, and allowances for things like tools, travel, uniforms or specific tasks.
These vary widely between awards, so the same base classification can produce quite different take-home pay depending on when and how the hours are worked. For how overtime interacts with leave accrual and superannuation, see our guide to overtime, leave & super.
Rates change on 1 July
Each year the Fair Work Commission conducts an Annual Wage Review. It sets the new National Minimum Wage and adjusts modern award minimum rates, with the changes usually taking effect from the first full pay period on or after 1 July.
Because the numbers move every year, a rate that was correct in one financial year can be an underpayment the next. Check the current rates for the year you are paying — via P.A.C.T. or the award itself — rather than carrying forward last year's figures.
Enterprise agreements & the risk of underpayment
Some workplaces use a registered enterprise agreement in place of an award. Before the Fair Work Commission approves one, it must pass the Better Off Overall Test (BOOT) — broadly, employees must be better off overall under the agreement than they would be under the relevant award.
Underpayment is treated seriously. Intentional underpayment of wages can be a criminal offence under Commonwealth law from 1 January 2025. Honest mistakes are handled differently from deliberate conduct, but the safest — and simplest — position is to pay at least the correct award or National Minimum Wage rate, every time.
Keep a clear paper trail: the award and classification you applied, the rates in force for that period, and how allowances and penalties were calculated. If a rate is ever queried, being able to show how you arrived at it is what separates a correction from an accusation.
Quick answers
How do I find the right award?
Use Fair Work's "Find my award" tool. Answer the questions about the industry and the work the employee does, and it points you to the modern award most likely to apply. Then match the employee to a classification to get the minimum rate.
What if no award covers the job?
If no modern award and no registered agreement apply, the National Minimum Wage sets the floor. It's the least you can legally pay an award- and agreement-free employee for ordinary hours, and casuals also get a casual loading (generally 25%) on top.
When do minimum rates change?
Usually on 1 July each year, after the Fair Work Commission's Annual Wage Review. The review sets the new National Minimum Wage and adjusts award minimums. Check the current rates each year rather than relying on last year's figures.
Is underpaying staff a crime?
Intentional underpayment of wages can be a criminal offence under Commonwealth law from 1 January 2025. Honest mistakes are treated differently, but deliberately paying less than lawful entitlements is now a serious matter. Paying at least the correct award or minimum-wage rate is the baseline.
Award interpretation and minimum-rate checks, built in
Ledra Pay maps each employee to their award and classification, applies penalty rates and allowances automatically, and flags any pay below the current minimum — with an auditable evidence trail behind every figure. When the Annual Wage Review lands, the rates update with it.
See Australian payroll →Government sources
- Fair Work Ombudsman — Awards (what modern awards are and what they cover).
- Fair Work Ombudsman — Find my award (identify the applicable award).
- Fair Work Ombudsman — Minimum wages (award rates and the National Minimum Wage).
- Fair Work Ombudsman — Pay and Conditions Tool (P.A.C.T.) (look up current pay rates).
- Fair Work Ombudsman — Penalty rates (weekend, public holiday and overtime penalties).
- Fair Work Commission — Annual Wage Review (the 1 July rate changes).
- Fair Work Ombudsman — Enterprise agreements (the Better Off Overall Test).