Some junior wage rates to be abolished

What it could mean for your business

The Fair Work Commission has confirmed upcoming changes to junior wage rates following a legal case brought by the Shop, Distributive and Allied Employees’ Association (SDA).

If your business employs younger workers under the Retail Award, Fast Food Award, or Pharmacy Award, these changes may affect your payroll costs, staffing budgets, and cashflow planning over the next 12 months.

For many businesses, particularly those with large teams of younger employees, this is something worth preparing for early rather than waiting until the changes come into effect.

What is changing with junior wage rates?

Traditionally, junior employees have been paid a percentage of the adult wage rate based on their age. This has applied across many industries and awards, particularly in retail, hospitality, fast food, and pharmacy.

The SDA argued that workers aged 18, 19, and 20 were often performing the same duties as older employees but receiving lower pay simply because of their age.

Following the outcome of the case, the Fair Work Commission has announced that junior wage rates under the following awards will be phased out:

General Retail Industry Award
Fast Food Industry Award
Pharmacy Industry Award

Under the proposed changes, employees aged 18 to 20 who have worked with the same employer for more than six months will become entitled to the full adult pay rate for their classification.

Employees aged 18 to 20 who have been employed for less than six months will continue to receive junior rates during that initial period.

Workers under the age of 18 are not currently impacted by these changes and will remain on junior rates.

At this stage, the Fair Work Commission has indicated the changes may begin from 1 December 2026, although further hearings are still expected to finalise the implementation process.

Why this matters for business owners

For some businesses, the increase in wage costs may be manageable.

For others, particularly those employing larger numbers of younger workers, the impact could be substantial.

Businesses in industries such as retail, fast food, and pharmacy often rely heavily on employees aged between 18 and 20. Once adult wage rates apply, payroll costs could increase across:

Base hourly wages
Penalty rates
Superannuation
Leave loading
Payroll tax obligations, where applicable

Even relatively small increases across multiple employees can quickly affect overall labour costs.

For example, if several employees move from junior rates to full adult rates at the same time, weekly payroll expenses may increase significantly without any increase in sales or revenue to offset the change.

This is why planning ahead matters.

The flow on effect to cashflow

One of the biggest risks for businesses is not necessarily the wage increase itself. It is the impact the increase can have on cashflow and day to day operations.

Higher payroll costs can affect:

Supplier payment schedules
Stock purchasing capacity
Rostering decisions
Profit margins
Business growth plans
Available working capital

Businesses already operating with tight margins may feel additional pressure if they are not forecasting these changes early.

This is particularly important for businesses with fluctuating seasonal income or inconsistent trading periods.

Having accurate bookkeeping and up to date reporting becomes increasingly important when wage costs shift.

Without reliable data, it becomes much harder to make informed staffing and budgeting decisions.

What businesses should be doing now

Although the changes are not expected to begin until late 2026, now is a good time to review your current workforce and understand where your business may be exposed.

Some practical steps include:

Review employee age profiles

Identify how many employees are currently aged between 18 and 20 and which awards they fall under.

This gives you a clearer picture of the potential increase in payroll costs.

Review employment duration

Because the proposed changes apply after six months of employment, businesses should understand which employees may transition first.

Update payroll forecasting

Forecasting future wage costs now can help avoid surprises later.

Even basic payroll modelling can help you understand how the changes may affect weekly, monthly, and annual cashflow.

Review pricing and margins

Some businesses may need to review pricing structures or operational efficiencies to absorb increased labour costs.

Make sure payroll systems are accurate

Award interpretation and payroll compliance are already complicated for many businesses. Upcoming wage changes will add another layer.

Having reliable payroll processes and accurate systems in place will help reduce errors and avoid compliance issues.

Good systems make these changes easier to manage

Changes like this highlight why reliable bookkeeping and payroll support matter.

When your payroll systems, reporting, and business data are accurate, it becomes easier to:

Understand the real cost of staffing
Plan for wage increases
Forecast cashflow
Adjust budgets
Make informed business decisions

This is also where the right business apps and payroll systems can help.

Many businesses are still relying on manual processes or outdated systems that make wage management harder than it needs to be.

First Class Accounts Ovens & Murray works with businesses to improve payroll processes, reporting accuracy, and business systems so owners have reliable information they can actually use.

Don’t wait until the changes begin

Waiting until wage increases take effect can leave businesses scrambling to adjust budgets and cashflow.

Planning ahead gives you more options and more time to make practical decisions for your business.

If you employ workers under the Retail, Fast Food, or Pharmacy Awards, now is the right time to review your payroll position and understand the possible impact.

First Class Accounts Ovens & Murray can help you:

Review your payroll setup
Run wage cost scenarios
Forecast cashflow impacts
Improve payroll and reporting systems
Identify process improvements that save time and reduce errors

Small adjustments made early are often easier to manage than reacting once costs increase.

If you are unsure how these junior wage changes may affect your payroll costs or cashflow, First Class Accounts Ovens & Murray can help you assess the numbers and plan ahead with practical support and accurate reporting. Get in touch today.

What are junior wage rates?

Junior wage rates are reduced pay rates that apply to employees under a certain age under many modern awards. These rates are usually calculated as a percentage of the adult wage rate.

Which awards are affected by the junior wage rate changes?

The announced changes currently apply to the General Retail Industry Award, Fast Food Industry Award, and Pharmacy Industry Award.

How can businesses prepare for higher payroll costs?

Businesses should review employee age profiles, update payroll forecasts, assess cashflow impacts, and ensure payroll systems are accurate and compliant before the changes take effect.