Are you prepared for the Junior Rates pay increase?

Working as a sales assistant, pharmacy assistant, waiter or fast-food cashier is a common first job for many young people. Junior employees make up a significant proportion of the retail, fast food, restaurant, and pharmacy workforce, providing businesses with a valuable source of entry-level talent. In many cases, employers are also attracted to hiring junior workers because modern awards prescribe junior rates of pay, making these roles a more economical staffing option while giving young people an opportunity to gain valuable workplace experience.

Changes to Junior Wage Rates

There has been an important development in this area as the Fair Work Commission has announced changes to junior wage rates under selected modern awards. If you employ 18, 19 or 20-year-old employees in the retail, fast food and pharmacy industry, these changes may impact your payroll costs, employee rates of pay and compliance obligations.

Importantly:

• There are no changes to minimum rates for employees under 18 years of age.
• Employees aged 18 to 20 will not receive the increased rates until they have completed more than 6 months' service with their employer.
• Service with another employer does not count towards the qualifying period. However, transfer of business arrangements may allow prior service to count.

Which Awards Are Impacted by the Junior Rates of Pay Decision?

The decision to phase out junior rates of pay applies across three major modern awards:

• General Retail Industry Award 2020 (Retail Employee Levels 1, 2 and 3 only)
• Fast Food Industry Award 2020 (All classification levels)
• Pharmacy Industry Award 2020 (Pharmacy Assistant Levels 1 and 2 only)

When Do the Junior Rates of Pay Changes Take Effect?

The first increase to junior rates of pay will apply from the first full pay period on or after 1 December 2026. These changes will be introduced gradually, with affected employees transitioning towards adult rates over time. The phase-in period will continue until 1 July 2029.

Businesses covered by the Retail, Fast Food and Pharmacy Awards should review payroll software and tenure tracking before December 2026. Employee age alone will no longer determine eligibility for junior rate discounts; continuous service with the current employer becomes a secondary wage trigger.

What Employers Should Do Now

No immediate pay rate adjustments are required prior to 1 December 2026. Current percentage tables and junior rates remain legally compliant until that date.

However, because eligibility introduces a service-based threshold, employers should prepare their operational setups early.

How the Six-Month Service Requirement Works

Eligibility for the phased rates depends on two conditions: the employee must be aged 18, 19 or 20 and have completed at least six months of continuous service with their current employer.

• Under 6 Months Service: Employees remain on baseline junior percentage scales (e.g. 70% of the adult rate for an 18-year-old).
• Reaching 6 Months Service: The employee transitions onto the phased rate scale starting from the first full pay period following their six-month milestone.
• Changing Employers: Service is calculated strictly per employer. Prior industry experience does not carry over; a worker changing employers resets their six-month service clock at zero with the new business.
• Transfers of Business: Prior service carries over only where a formal transfer of business occurs under Section 311 of the Fair Work Act 2009.
• Employees Under 18: Rates for workers aged 17 and under are completely unaffected by this decision.

What Do You Need to Do?

If you employ employees aged 18 to 20, you should review these changes now. To prepare:

1. Identify affected employees.
2. Review the new rates of pay that apply from 1 December 2026.
3. Document the change.
4. Update your payroll systems.

With the Fair Work Ombudsman recovering $453 million in underpayments for more than 181,000 workers in 2025-26, understanding your wage obligations and implementing pay rate changes correctly has never been more important.