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20 year old retail workers soon to be paid adult rates

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By Chao Ni, Associate, MST Lawyers

A Fair Work Commission full bench has ordered changes to the General Retail Industry Award 2010 (“Retail Award”) by requiring the adult base rate to be paid to 20 year old workers with more than 6 month’s experience.  Currently, 20 year old workers are entitled to 90% of the adult base rate under the Retail Award.

The Commission held that “the Award is not achieving the modern awards and minimum wages objectives…and that the discounted rate for all 20 year old retail employees is not a fair and relevant minimum safety net.”

Employer evidence included claims that “compared to 21 year olds, 20 year olds exhibit less productivity, greater recklessness, immaturity, a higher error rate, and unreliability.”  Although the Commission agreed with the evidence supported the idea that people mature with age, it questioned the “relevance or utility” of that generalisation because work experience was more important.  The Commission also noted that “none of the witnesses called by employer organisations suggested the variation would have any significant adverse effect” on business, productivity and employment costs.

The Commission agreed with evidence presented by the Shop Distributive and Allied Employees’ Association (SDA) that a significant number of 20-year-olds had at least three years’ experience in the industry, and some supervised older employees.  It accepted the SDA’s conclusion “there was no difference in the work and duties” of 20 and 21 year-olds who have reached the retail employee level one grade.

What this means for your business

If you employ staff under the Retail Award, 20 year old workers with more than 6 months’ service at your business will be entitled to 95% of the adult base rate from 1 July 2014, and 100% of the adult base rate from 1 July 2015.  As a result of the higher base rate, 20 year old workers will receive increased entitlements under the Retail Award such as shift and overtime penalties.

We expect to see unions push for similar changes in other modern awards, as well as the removal of junior rates for 18 and 19 year olds.

Businesses are able to implement an enterprise agreement to displace the application of modern awards. For further information on this article or on how to implement an enterprise agreement, please contact our Workplace Relations team on +61 3 8540 0200 or email the author of this article, Chao Ni.