Minimum Wage and Penalty Rates 2026-27: What Employers Must Pay
The national minimum wage is $26.44 an hour ($1,004.90 for a 38-hour week) from the first full pay period on or after 1 July 2026 — but if your staff are covered by a modern award, as most small business employees are, the award's minimum rate for their classification is what you must actually pay, and those rates rose 4.75% on the same date. Here's how award rates, casual loading, penalty rates, overtime and allowances work, with examples from the Retail and Hospitality awards.
The 2026-27 numbers at a glance
| Item | From 1 July 2026 |
|---|---|
| National minimum wage (adult full-time or part-time) | $26.44 an hour / $1,004.90 a week (38 hours) |
| National minimum wage (adult casual, includes 25% loading) | $33.05 an hour |
| Increase to the national minimum wage | 6% |
| Increase to modern award minimum rates | 4.75% |
| Superannuation guarantee | 12%, paid on top of wages |
All figures are as at September 2026; new rates land every July. Our payroll changes 2026-27 guide covers the other July changes — payday super, tax tables and STP.
National minimum wage or award rate: which one applies?
The national minimum wage applies directly only to employees no award or enterprise agreement covers — mostly managers and professionals. Everyone else is covered by one of the 100-plus modern awards, each with its own minimum hourly rates by classification level, many of them above the national minimum wage.
That's why the 4.75% award increase matters more to most small businesses than the 6% headline. A shop assistant on the General Retail Industry Award isn't entitled to $26.44 — they're entitled to at least the Retail Level 1 rate of $27.81 an hour (as at September 2026). Working out which award covers your business, and which classification each employee sits in, is the foundation for everything else here — our modern awards guide walks through both. Two more points:
- The rise applies from the first full pay period on or after 1 July, not 1 July itself — if your fortnight began on 29 June 2026, the old rates applied to that whole fortnight.
- Paying above the minimum doesn't switch off the award. Penalty rates, overtime and allowances still apply unless you've set up an arrangement the award allows, such as an annualised wage clause or an individual flexibility agreement. A generous salary in a contract that never mentions the award is how honest employers end up underpaying — see what to put in an employment contract.
Casual loading: the 25% on top
Casual employees get a 25% loading on the minimum hourly rate instead of paid leave, notice and redundancy. On the national minimum wage that's $33.05 an hour; on Retail Level 1 it's $34.76 ($27.81 × 1.25). The traps:
- Loading applies to every hour, including penalty-rate hours. Award casual penalty percentages already build it in, so you never add 25% on top — a Retail Level 1 casual gets 175% on a Sunday, not 150% plus 25%.
- Minimum shift lengths still apply. Retail requires a minimum engagement of 3 hours for casuals and part-timers; Hospitality requires casuals to be paid for at least 2 consecutive hours.
- Regular casuals can ask to become permanent — see our casual vs part-time vs full-time guide.
Penalty rates: how they work
Penalty rates are higher hourly rates for evenings, weekends, public holidays and overtime, written into each award as a percentage of the minimum hourly rate: 150% is time-and-a-half, 200% is double time. Percentages and start times differ between awards, so treat the two examples below as a pattern, not a universal rule.
Retail Award example: Level 1 shop assistant
General Retail Industry Award 2020, adult Level 1, minimum hourly rate $27.81 (as at September 2026).
| When | Full-time / part-time | Casual (includes loading) |
|---|---|---|
| Monday–Friday, ordinary hours | 100% — $27.81 | 125% — $34.76 |
| Monday–Friday after 6pm | 125% — $34.76 | 150% — $41.72 |
| Saturday | 125% — $34.76 | 150% — $41.72 |
| Sunday | 150% — $41.72 | 175% — $48.67 |
| Public holiday | 225% — $62.57 | 250% — $69.53 |
So a casual shop assistant working an 8-hour Sunday shift is owed at least 8 × $48.67 = $389.36 in wages, plus 12% super.
Hospitality Award example: Level 1 food and beverage attendant
Hospitality Industry (General) Award 2020, adult Level 1, minimum hourly rate $26.44 (as at September 2026).
| When | Full-time / part-time | Casual (includes loading) |
|---|---|---|
| Monday–Friday, ordinary hours | 100% — $26.44 | 125% — $33.05 |
| Saturday | 125% — $33.05 | 150% — $39.66 |
| Sunday | 150% — $39.66 | 175% — $46.27 |
| Public holiday | 225% — $59.49 | 250% — $66.10 |
Hospitality has no percentage penalty for weeknights; instead it pays a flat per-hour loading for evening and night work Monday to Friday, listed in the pay guide.
Overtime and public holidays
Overtime is work beyond the ordinary hours the award allows — more than 38 hours a week (often averaged), more than the daily maximum, or outside the ordinary span. Retail pays permanent staff 150% for the first 3 hours of overtime and 200% after that, with 200% for overtime on a Sunday. Hospitality pays 150% for the first 2 hours and 200% after that. Casuals have their own overtime rates, and part-timers' hours beyond their agreed pattern are usually overtime too, so read the award's overtime table.
Public holidays are set by each state and territory, so the list differs between states. A permanent employee given the day off is paid their base rate for the hours they'd have worked; anyone who works gets the penalty rate.
Junior, apprentice and trainee rates
Most awards let you pay employees under 21 a percentage of the adult rate. The Retail Award scale is typical, though percentages differ between awards:
| Age | % of adult rate |
|---|---|
| Under 16 | 45% |
| 16 | 50% |
| 17 | 60% |
| 18 | 70% |
| 19 | 80% |
| 20 | 90% (100% after more than 6 months with the same employer) |
Penalty rates and casual loading are applied to the junior rate, not the adult one.
A change is coming for 18- to 20-year-olds. On 31 March 2026 the Fair Work Commission decided that 18- to 20-year-olds under the Retail, Fast Food and Pharmacy awards should move to the full adult rate after more than 6 months with their current employer, phased in provisionally from 1 December 2026 in 5-percentage-point steps until 18-year-olds reach 100% by 1 July 2029, with the transitional arrangements still subject to further submissions. Under-18s and other awards aren't affected. Check the FWO's junior pay rates page for the final determinations before your December pay runs.
Apprentice rates are a percentage of the tradesperson's rate that steps up each year, with higher percentages for those who've completed Year 12 and separate adult apprentice rates; trainee rates come from the National Training Wage schedule. Use the Fair Work pay calculator for both.
Allowances
Allowances are extra payments for particular conditions, expenses or responsibilities. Common ones in retail and hospitality:
- Laundry or uniform — where you require a specific uniform and don't launder it yourself
- Meal — when someone works overtime beyond a set point without notice
- First aid — for a qualified employee you appoint as first aid officer
- Split shift and tool allowances — hospitality staples for broken shifts and cooks supplying their own knives
- Higher duties — covering a higher classification for a shift or longer
Dollar amounts change every July and are listed in the FWO's pay guide for your award, and some count as ordinary time earnings for super while others don't, so code them correctly. Our payroll software comparison looks at which packages handle award penalties and allowances automatically — if you roster casuals across weekends, that feature pays for itself.
Use the Fair Work Pay Calculator
The FWO's Pay and Conditions Tool (P.A.C.T) at calculate.fairwork.gov.au is free and authoritative. For a new employee, select the award, answer the classification questions based on the duties they'll actually perform, choose the employment type and age, then enter a typical week's shifts to see base pay, penalties and loadings line by line. Save the result with their employment records as evidence you took reasonable steps to get the rate right, and repeat every July and whenever duties, hours or age change.
What happens if you get it wrong
Criminal wage theft. Since 1 January 2025, intentionally underpaying an employee has been a criminal offence under the Fair Work Act. For an individual the maximum is 10 years' imprisonment and/or a fine of the greater of three times the underpayment or 5,000 penalty units ($1.82 million); for a company, the greater of three times the underpayment or 25,000 penalty units ($9.1 million) (as at September 2026, with the penalty unit at $364). The offence requires intent — honest mistakes aren't criminal, though you still owe every cent.
The Voluntary Small Business Wage Compliance Code. If you have fewer than 15 employees, the Code is your protection: where the FWO is satisfied you've complied with it, it must not refer you for criminal prosecution. Complying means making a genuine effort to work out the correct rates, keeping up to date, relying on FWO or employer-association guidance, keeping records and fixing any underpayment promptly.
Civil penalties and back pay. Most underpayment cases are dealt with civilly. For a small business employer the maximum civil penalty is 60 penalty units ($21,840) per contravention for an individual and 300 penalty units ($109,200) for a company (as at September 2026) — and each underpaid employee, often each pay period, can be a separate contravention. Employers with 15 or more staff face maximums five times higher, or three times the underpayment if greater, and up to 15,000 penalty units ($5.46 million) for serious contraventions. You also repay the shortfall, super and interest, typically going back six years. If you find an underpayment, calculate it, pay it back with super, fix the cause and document everything.
Key takeaways
- The national minimum wage is $26.44 an hour ($1,004.90 a week) from 1 July 2026, but most employees are entitled to their award rate, which is often higher — Retail Level 1 is $27.81.
- Casual loading is 25% on every hour, and award casual penalty percentages already include it — never add it twice.
- Under Retail and Hospitality, permanent staff get 125% on Saturdays, 150% on Sundays and 225% on public holidays; casuals get 150%, 175% and 250%. Other awards differ.
- Junior rates under the Retail, Fast Food and Pharmacy awards are being phased out for 18- to 20-year-olds with more than 6 months' service, provisionally from 1 December 2026.
- Run every employee through the Fair Work Pay and Conditions Tool each July and whenever duties change, and keep the printout.
- Intentional underpayment is a crime carrying up to 10 years' jail and fines of up to $9.1 million for companies; following the small business Wage Compliance Code protects honest employers from criminal referral.
Where to get help
- Fair Work Ombudsman — Pay and Conditions Tool — official pay, shift, leave and notice calculators
- Fair Work Ombudsman — Pay guides — every rate, penalty and allowance for your award
- Fair Work Ombudsman — Criminal prosecution and the Wage Compliance Code — the Code and guide to paying employees correctly
- Fair Work Infoline: 13 13 94 — free advice on award coverage and classification
- Your accountant or bookkeeper for payroll setup and back pay; an employment lawyer or industry association for annualised salary arrangements
Frequently asked questions
What is the minimum wage in Australia from 1 July 2026?
The national minimum wage is $26.44 an hour, or $1,004.90 for a 38-hour week, from the first full pay period on or after 1 July 2026 — a 6% rise. Casuals on the national minimum wage get $33.05 an hour including the 25% loading. Most employees are covered by a modern award instead, and award minimum rates rose 4.75% on the same date.
Do I pay the national minimum wage or the award rate?
If an award covers the job, you must pay at least the award rate for the employee's classification — the national minimum wage only applies to award-free and agreement-free employees. Award rates are often higher: Retail Level 1 is $27.81 an hour from 1 July 2026, not $26.44.
Do I have to pay penalty rates on weekends?
If the award covering your employee sets weekend penalty rates, yes — they're a legal minimum, not a bonus. Under the Retail Award, permanent staff get 125% on Saturdays and 150% on Sundays, and casuals get 150% and 175% (including their loading). Hospitality is 125% and 150% for permanents and 150% and 175% for casuals.
How much is casual loading in Australia?
Casual loading is 25% on top of the minimum hourly rate for the employee's classification, paid for every hour worked. On the national minimum wage that's $33.05 an hour; on Retail Level 1 it's $34.76. Award casual penalty rates already include the loading, so you never add 25% again on a weekend or public holiday.
What happens if I underpay an employee in Australia?
You owe the shortfall plus super and interest at minimum, and you can face civil penalties of up to 60 penalty units ($21,840) per contravention for an individual or 300 penalty units ($109,200) for a small business company (as at September 2026). Since 1 January 2025, intentional underpayment is also a criminal offence carrying up to 10 years' jail and fines of up to $9.1 million for companies.
General information only. This guide doesn't take your personal or business circumstances into account and isn't financial, legal or tax advice. Rates and thresholds change — check the official sources linked in this guide and get qualified advice where your circumstances require it.