If you are 18, 19 or 20 years old and work in retail, fast food or pharmacy, a significant pay rise may be coming your way.
In March 2026, the Fair Work Commission handed down a landmark decision to progressively abolish junior pay rates for adult workers under three major modern awards. The decision is expected to affect around 500,000 young Australians and has been described by some commentators as one of the most significant wage equity reforms since the introduction of equal pay for women.
But what exactly is changing, who will benefit, and what impact might the reforms have on employment opportunities for young people?
What are junior pay rates?
Many modern awards allow employers to pay workers under the age of 21 a percentage of the adult wage rather than the full adult rate.
For example, under the affected awards, employees have traditionally received:
- 18 years old – 70% of the adult rate
- 19 years old – 80% of the adult rate
- 20 years old – 90% of the adult rate
This means two employees performing exactly the same work could receive substantially different wages solely because one is under 21 years of age.
Historically, junior rates were intended to encourage employers to hire younger workers by recognising that they may have less experience and require more training and supervision.
What has the Fair Work Commission decided?
Following an application by the Shop, Distributive and Allied Employees’ Association (SDA), the Fair Work Commission determined that adult workers should not continue to receive discounted wages simply because of their age.
The Commission decided that:
- employees aged 18, 19 and 20 should progressively move to full adult rates of pay;
- junior rates will remain for workers under 18 years of age;
- employees aged 18 to 20 will be entitled to the full adult wage once they have completed six months’ service with the same employer; and
- the changes will be phased in gradually over several years.
The Commission accepted that many young adults perform the same duties as older employees and often possess significant workplace experience by the time they turn 18.
Which workers are covered?
At present, the decision only affects employees covered by:
- the General Retail Industry Award 2020;
- the Fast Food Industry Award 2020; and
- the Pharmacy Industry Award 2020.
This means workers employed by businesses such as supermarkets, fast food outlets, pharmacies and many retail stores are likely to be affected.
The decision does not currently apply to other awards such as hospitality, manufacturing or clerical awards, although many commentators expect pressure for similar reforms to arise in those industries in the future.
When will the changes take effect?
The changes will not occur immediately.
The Fair Work Commission has indicated that the new arrangements are expected to commence from 1 December 2026 and will be phased in over approximately four years.
The phased approach is designed to allow businesses time to adjust to increased labour costs.
Current proposals indicate:
- workers aged 20 will reach full adult rates first;
- workers aged 19 will follow;
- workers aged 18 will progressively transition to full adult rates by around mid-2029.
The Fair Work Ombudsman has confirmed that detailed award variations and updated pay guides will be released as implementation progresses.
Why supporters say the reform is necessary
Supporters argue that the reform is fundamentally about fairness.
At 18, Australians can:
- vote;
- enter into contracts;
- marry;
- serve in the armed forces;
- take out loans; and
- assume full legal responsibility for their actions.
The SDA argued that young adults face the same rent, transport, grocery and cost-of-living pressures as older workers and should therefore receive the same pay when performing the same work.
The Commission largely accepted this reasoning, finding that age alone should not justify paying an adult worker less than another adult performing the same duties.
Many younger workers also begin employment while still at school and may have several years of experience before they reach adulthood. By 18 or 19, some are already shift supervisors, key holders or responsible for training new employees.
Why some employers oppose the changes
Not everyone supports the decision.
Employer groups argued that junior rates help create employment opportunities for young workers and that removing them may make employers less willing to hire inexperienced staff.
Their concerns include:
Fewer entry-level jobs: If an 18-year-old employee costs the same as a 25-year-old employee, employers may choose the more experienced applicant.
Reduced hours: Businesses facing higher wage costs may reduce staffing levels or roster fewer employees.
Pressure on small business: Retailers, pharmacies and fast-food operators often operate on tight profit margins. Increased wage costs may ultimately be passed on to consumers through higher prices.
Some employer groups commissioned economic modelling suggesting the changes could reduce youth employment opportunities, although unions strongly dispute those predictions.
Will this affect youth employment?
The answer is not yet clear.
This debate has existed for decades whenever minimum wages increase.
Some economists argue that higher wages reduce employment opportunities for younger workers. Others point to evidence showing that moderate wage increases often have little effect on employment while improving living standards for workers who remain employed.
The Fair Work Commission ultimately concluded that maintaining junior rates for workers under 18, while progressively introducing adult rates for workers over 18, struck an appropriate balance between encouraging youth employment and ensuring fair pay for adult workers.
What should young employees do?
If you are aged between 18 and 20 and work in retail, fast food or pharmacy:
- check which award covers your employment;
- monitor Fair Work announcements about implementation dates;
- review your payslips when the changes commence; and
- seek advice if you believe you are not receiving the correct award rate.
The decision does not mean every young worker will immediately receive an adult wage. However, it does establish an important principle: once a worker reaches adulthood and gains experience with an employer, age alone should not determine their pay.
For many young Australians, that represents a significant shift towards equal pay for equal work.
How we can help
Employment law changes can create uncertainty for both employees and employers.
If you are a young employee, it is important to understand whether you are covered by an affected award, when the new rates will apply to you, and whether your employer is paying you correctly.
If you are an employer, the abolition of adult junior rates may require changes to payroll systems, budgeting, rostering practices, employment contracts and workforce planning.
Our Employment Law team can assist with:
- advising whether an employee is covered by an affected award;
- reviewing employment contracts and workplace policies;
- conducting wage and award compliance audits;
- assisting with payroll and classification reviews;
- advising on underpayment and wage recovery claims;
- responding to Fair Work Ombudsman investigations;
- advising on workplace disputes arising from pay and entitlements; and
- helping businesses plan for significant workplace law reforms.
The changes to junior pay rates reflect a broader trend towards increased scrutiny of employee entitlements and workplace compliance. Obtaining advice early can help both employees and employers understand their rights and obligations and avoid costly disputes.
If you have questions about how these changes may affect you or your workplace, contact JFM Law for advice tailored to your circumstances. Call us on 1300 882 386 or email us.