Working in Australia’s retail sector comes with specific rights and entitlements protected by law. For both employees and employers, understanding the core concepts of award rates and penalty rates is essential. For employees, it ensures you are paid correctly. For employers, it ensures compliance, avoids severe penalties, and builds a trustworthy workplace.
This guide breaks down the key rights for retail workers, focusing on how your pay should be calculated.
The Foundation: What is the General Retail Industry Award?
Most retail workers in Australia are covered by the General Retail Industry Award 2020. This is a legal document that sets out the minimum pay rates and conditions for the industry. Your employment contract cannot provide conditions that are worse than this Award.
Key Takeaway: Your first step is to confirm you are covered by the Retail Award. You can find this on the Fair Work Ombudsman website.
Your Base Pay: Understanding Award Rates
Your award rate is the minimum hourly pay you are entitled to based on your job role and experience level. The Award classifies employees into different levels, each with a corresponding pay rate.
Example: A Level 1 employee (entry-level, like a sales assistant) has a lower minimum rate than a Level 4 employee (who might have supervisory duties). It is crucial to be classified correctly.
Action for Employees: Check your payslip against the current Award pay guide. Is your classification correct? Is your hourly rate at least the minimum for that level?
Action for Employers: Misclassifying employees is a common cause of underpayment. Ensure your payroll system is updated with the latest Award rates and classifications.
Extra Pay for Unsociable Hours: Penalty Rates Explained
Penalty rates are higher pay rates designed to compensate employees for working outside standard hours, such as evenings, weekends, and public holidays. They are a critical part of the Retail Award.
Here’s a typical example of how penalty rates might apply:
| Day / Time | Typical Penalty Rate (Illustrative) |
| Monday – Friday (Day) | Base Award Rate (e.g., 100%) |
| Evenings (after 6 PM) | Higher than base rate (e.g., 115%) |
| Saturdays | Significantly higher (e.g., 125%) |
| Sundays | Even higher (e.g., 150%) |
| Public Holidays | Highest rate (e.g., 250%) |
Example: If your base rate is $25 per hour, working on a Sunday at a 150% penalty rate would entitle you to $37.50 per hour.
Action for Employees: Cross-reference your timesheets with your payslip. Were you paid the correct higher rate for all your weekend and evening shifts?
Action for Employers: Manually calculating penalty rates is error-prone. Automated payroll software is essential for accuracy.
The Serious Issue of Wage Underpayment
Wage underpayment occurs when an employee does not receive their full legal entitlements. This includes not only underpaying the base award rate but also failing to pay correct penalty rates, overtime, or leave loading.
The consequences for businesses are now more severe than ever. Recent “Closing Loopholes” legislation has introduced criminal penalties for intentional wage underpayment, alongside significant financial fines. As highlighted in cases like the Sinamon Cafe in WA, regulators are actively enforcing these laws.
Your Rights and Responsibilities
- As an Employee: You have the right to a detailed payslip that clearly breaks down your hours, rates (including any penalty rates), and deductions. If you suspect underpayment, you can seek help from the Fair Work Ombudsman or organisations like JobWatch.
- As an Employer: You have a responsibility to pay your staff correctly. This includes keeping meticulous records and using reliable systems to apply Award rules automatically.
How Workstem Prevents Unpaid Wages
Automated Compliance Solutions
Simplify award interpretation and payroll processing with Workstem, the all-in-one workforce management & payroll software designed for every industry.
Our payroll compliance system ensures:
- Award Interpretation: Automatic application of correct rates
- Real-time Calculations: Accurate overtime and penalty calculations
- Record Keeping: Digital audit trails for 7+ years
- Compliance Alerts: Proactive notification of potential underpayments
Employer Benefits
- 99.8% payroll accuracy rate
- Zero wage theft penalties for compliant clients
- 75% reduction in payroll processing time
- Automated Fair Work reporting
Choose from our Standard or Advanced plan to suit your business needs, and stay Fair Work compliant with confidence.
Underpayment Q&A: Your Top Questions Answered
Q1: What’s the difference between underpayment and wage theft?
A: Underpayment refers to any instance where employees receive less than their entitled wages, whether intentional or accidental. Wage theft specifically refers to deliberate, intentional underpayment of employees’ entitlements. Since 2024, intentional wage theft can result in criminal penalties including significant fines and even imprisonment in some states.
Q2: Can I claim unpaid wages if I was paid cash-in-hand?
A: Yes, cash payments don’t remove your entitlement to proper wages. You can still make a claim, though it may be more challenging without formal records. Evidence can include bank statements showing regular cash deposits, text messages discussing hours or pay, witness statements from coworkers, or your own detailed records of hours worked.
Q3: What if I signed a contract agreeing to lower rates than the award?
A: Any contract term that provides less than the minimum award or legal entitlements is void and unenforceable. Even if you signed such a contract, you’re still entitled to be paid according to the relevant award or agreement. Employers cannot contract out of their legal obligations.
Q4: How far back can I claim unpaid superannuation?
A: Unlike other wage claims, there’s generally no time limit for claiming unpaid superannuation. You can go back to when the super was first owed, though practical limitations may apply. The ATO can help recover unpaid super going back multiple years.
Q5: What happens if my employer disputes my hours or classification?
A: If your employer disputes your claims, the burden of proof often shifts to them to provide evidence. Employers are legally required to keep accurate time and wages records. If they cannot produce these records, Fair Work may accept your reasonable estimates of hours worked.
Q6: Can I claim for unpaid wages if I’m no longer employed there?
A: Yes, former employees have the same rights to claim unpaid wages as current employees. The process is identical, and time limits still apply (generally 6 years). Many wage claims are actually made by former employees.
Q7: What if I was classified as a contractor but believe I was actually an employee?
A: This is common. If you were really an employee misclassified as a contractor, you can claim all employee entitlements including minimum wages, leave, and superannuation. The Fair Work Ombudsman uses a multi-factor test to determine your true employment status.
Q8: Are there protections against being victimized for making a claim?
A: Yes, the Fair Work Act provides strong protections against adverse action (including dismissal, discrimination, or threats) for exercising workplace rights. If you experience victimization for making a wage claim, you may have additional legal claims against your employer.
Q9: What if my employer says they can’t afford to pay what they owe?
A: Financial difficulty doesn’t remove the legal obligation to pay owed wages. Options include: payment plans (get this in writing), Fair Work enforcement action, or if the company becomes insolvent, claiming through the Fair Work Entitlements Guarantee scheme.
Book a free demo with our payroll experts and experience how Workstem can streamline your payroll and workforce operations.
Read More：
2025 Cleaning Services Pay Calculator: Avoid Underpayment Risks
Avoiding Underpayments: Tackling the complexities of the SCHADS Award
Underpayment Is Now a Crime: Protect Your Business with Workstem
