Adult Age, Adult Wage: The Fair Work Commission Moves to Phase Out Junior Pay Rates – What Employers Need to Know

On 31 March 2026, a Full Bench of the Fair Work Commission (the Commission) handed down one of the most significant wage decisions in recent decades, determining that employees aged 18 to 20 covered by certain retail-facing awards will be entitled to the full adult award rate once they have completed six months’ employment with their employer.

The decision affects the General Retail Industry Award 2020, the Fast Food Industry Award 2020 and the Pharmacy Industry Award 2020. It will be implemented gradually, with the Commission indicating that the changes are expected to be phased in from December 2026 and completed by mid-2029.

The Shop, Distributive and Allied Employees’ Association (SDA), which lodged the application in 2024 (matter AM2024/24), has described the ruling as a landmark development in Australia’s minimum wage framework. It is estimated to affect around half a million young workers across the retail, fast food and pharmacy sectors.

What Were the Existing Arrangements?

Under the relevant awards, workers aged under 21 have traditionally been paid at discounted rates relative to the adult award rate.

For example, under the current framework:

• 18-year-olds receive 70% of the adult rate;
• 19-year-olds receive 80% of the adult rate; and
• 20-year-olds receive 90% of the adult rate.

These “junior rates” have long been a feature of Australia’s industrial relations system and have historically been justified on the basis that younger workers may have less experience and productivity, and that lower wage rates can encourage employers to provide entry-level employment opportunities.

The Case for Workers

The SDA, supported by the Australian Council of Trade Unions, argued that paying adult workers less solely on the basis of age was increasingly difficult to justify.

They emphasised that Australians aged 18 and over can vote, enter contracts, enlist in the armed forces and legally consume alcohol — yet remain subject to reduced minimum wages under modern awards even when performing the same work as older colleagues.

Worker advocates also argued that young adults face the same cost-of-living pressures as other Australians, and that reduced pay rates can make it more difficult for students to balance employment with tertiary study.

The Case for Employers

Employer groups, including the Australian Retailers Association and the Australian Chamber of Commerce and Industry, opposed the changes.

Employer representatives argued that junior wage rates recognise that younger workers are often still developing workplace skills and experience, and that the differential helps incentivise businesses to offer employment opportunities to younger workers.

Some larger employers also highlighted the significant role that retail and fast food businesses play in providing first jobs to young Australians, expressing concern that increased labour costs could affect hiring practices in sectors that rely heavily on entry-level staff.

The Commission’s Decision and Reasoning

In its decision, the Full Bench closely examined whether there was a sufficient basis to conclude that employees aged 18 to 20 perform work of materially lower value than older employees performing the same roles under the same awards.

The Commission ultimately concluded that it could not assume that young adult employees are inherently less productive than older workers, particularly in lower-classification roles where the work performed is often substantially the same.

At the same time, the Commission sought to balance considerations of fairness with the importance of maintaining employment opportunities for younger workers.

Accordingly, the decision preserves junior rates for workers under 18 years of age, recognising that minors may face particular labour-market disadvantage.

For employees aged 18 to 20, the Commission determined that junior rates may still apply during the first six months of employment with a particular employer, after which those employees must be paid the full adult award rate.

The Commission also indicated that the transition to the new arrangements will occur gradually, with the changes expected to be phased in from December 2026 and completed by mid-2029.

What This Means for Employers

Employers covered by the affected modern awards should begin preparing for these changes well ahead of their implementation.

Payroll systems will need to be updated to accommodate the staged changes to junior wage rates as they take effect.

Businesses operating under enterprise agreements that incorporate junior wage structures should also review those agreements to ensure they remain compliant with applicable award minimums once the changes take effect.

While the phased implementation provides a period of adjustment, the direction of the reform is clear: young adult workers will increasingly be entitled to the full adult award rate once they have gained a short period of experience with their employer.

Get in Touch

If your business employs workers aged under 21 in the retail, fast food or pharmacy sectors, this decision may directly affect your minimum wage obligations and workforce planning.

We are available to discuss the implications of the Commission’s landmark ruling and to assist you in navigating the transition — whether that involves reviewing enterprise agreements, employment contract terms or assessing the broader operational impact on your business.

If you wish to discuss any aspect of this article or require specialist advice or assistance in relation to an employment law issue, please do not hesitate to contact us.