Businesses operating in the retail, fast food and pharmacy sectors should prepare for significant changes to junior wage arrangements following a recent decision by the Fair Work Commission. These reforms will progressively increase pay rates for eligible employees aged 18 to 20 years and may have important payroll, budgeting and workforce planning implications.
Fair Work Commission confirms changes to junior wage rates
The Fair Work Commission has confirmed amendments to junior wage provisions under the:
- General Retail Industry Award 2020
- Fast Food Industry Award 2020
- Pharmacy Industry Award 2020
Under the new arrangements, eligible employees aged 18 to 20 years who have completed at least six months of continuous service with their current employer will progressively become entitled to the full adult rate of pay.
The changes will be introduced through transitional arrangements commencing from 1 December 2026 and continuing through to 1 July 2029, depending on the award that applies.
What’s changing?
Historically, junior wages under these awards have been determined primarily by age, with employees receiving a percentage of the adult rate until they reached the relevant age threshold.
The Fair Work Commission has determined that, once an employee reaches adulthood, service and workplace experience should carry greater weight than age alone when setting minimum pay rates. As a result, eligible employees aged 18, 19 and 20 who remain with the same employer and meet the service requirements will progressively move to the full adult rate under the relevant award.
This represents a significant shift in how junior wage rates are calculated and recognises the skills and experience employees develop over time.
What’s staying the same?
Importantly, there are no changes to junior rates for employees under 18 years of age. You should continue paying employees under 18 in accordance with the existing provisions of the applicable award.
For many businesses, this means the immediate impact will be limited to employees aged 18 to 20, although workforce demographics may influence the overall financial effect.
What does this mean for employers?
Employers with younger workforces are likely to experience the greatest impact from these reforms. This includes:
- Retail businesses
- Quick service restaurants and fast-food operators
- Community and retail pharmacies
Depending on workforce composition, you may see increased labour costs over time as more employees become eligible for adult rates earlier than under the previous system. The changes may also require updates to payroll systems and processes to ensure compliance with the new award provisions.
Steps employers should take now
Although the changes do not commence until late 2026, you should begin preparing well in advance, and we recommend that you:
- Identify employees who are currently aged 18 to 20.
- Review employee service records and determine when individuals may become eligible for adult rates.
- Assess the financial impact of future wage increases on labour budgets.
- Confirm payroll systems can accommodate the new arrangements and transitional provisions.
- Monitor award updates to ensure ongoing compliance.
Early planning can help reduce compliance risks and avoid unexpected cost pressures as the changes take effect.
Understanding the transition period
A key consideration for employers is that implementation requirements will vary between the Retail, Fast Food and Pharmacy Awards.
The Fair Work Commission has established award-specific transitional arrangements, meaning employers should review the provisions relevant to their workforce carefully.
Understanding these timelines and obligations will be critical to maintaining compliance and accurately forecasting future labour costs.
How we can help
Award changes can create complex compliance and payroll challenges, particularly where transitional arrangements apply.
At Moore, we help businesses understand and respond to workplace regulation changes with confidence. Our team can assist with:
- Reviewing award coverage and employee classifications
- Assessing the financial impact of the reforms
- Conducting payroll compliance reviews
- Identifying workforce planning considerations
- Understanding employer obligations throughout the transition period
By taking proactive steps now, you can better manage the impact of these changes and ensure your payroll practices remain compliant.
If you’d like to discuss how these reforms may affect your business, contact our Business Advisory team.
