One of the most common mistakes new retail shop owners make is paying the wrong hourly rate.

Under the Fair Work Act, most retail staff are covered by the Retail Industry Award 2020 [MA000004].

But award rates depend on the employee's age, classification level, employment type (casual, part-time, full-time), and when they work.

This step-by-step guide walks you through determining exactly what to pay each team member.

Step 1: Identify If the Retail Award Applies to Your Shop

The Retail Industry Award applies to businesses whose primary activity is selling goods to the public.

This includes:

  • Boutiques, clothing stores, and footwear shops.
  • Supermarkets, grocery stores, and convenience stores.
  • Hardware stores, nurseries, and pet supply shops.
  • Newsagents, bookstores, and stationery shops.
  • Chemists/pharmacies (but not pharmacists – they have a separate award).
Excluded: Hairdressers, beauty salons, restaurants with table service, and wholesale-only businesses. These have different awards.

Step 2: Determine Employment Type

The award has three employment categories:

  • Full-time: 38 ordinary hours per week. Entitled to paid annual leave, sick leave, and public holidays.
  • Part-time: Works fewer than 38 hours, with a regular pattern. Also entitled to all leave entitlements pro-rata.
  • Casual: No guaranteed hours, no paid leave, but receives a minimum 25% casual loading on top of the base rate.

Remember: Part-time employees must have a written agreement specifying minimum and maximum hours.

Step 3: Find the Correct Classification Level

The Retail Award has four main classification levels. You must assign each employee a level based on their duties, not their job title.

  • Level 1 (Introductory / Trainee): No industry experience or training. Duties: basic stock handling, cleaning, observing. Minimum engagement: 3 hours per shift.
  • Level 2 (Retail Employee Grade 1): Some experience or short training. Duties: operate register, serve customers, price goods, basic ordering.
  • Level 3 (Retail Employee Grade 2): Significant experience or certificate II. Duties: train others, open/close shop, handle cash reconciliation, supervise up to 2 staff.
  • Level 4 (Retail Employee Grade 3 – Supervisor): Certificate III or equivalent. Duties: manage shifts, complete rosters, handle complaints, supervise multiple staff.
Tip: Most new casual shop assistants start at Level 2. You cannot keep someone at Level 1 for more than 3 months.

Step 4: Apply the Correct Base Hourly Rate

As of July 1, 2025 (latest published rates – check Fair Work for annual updates):

  • Adult Level 2 (casual): ~$28.00 per hour (includes 25% loading).
  • Adult Level 2 (full-time/part-time): ~$22.50 per hour.
  • Junior rates (under 21): Percentage of adult rate: 16y – 40%, 17y – 50%, 18y – 60%, 19y – 70%, 20y – 80%.

Step 5: Add Penalty Rates for Weekends and Evenings

Ordinary hours for retail are Monday to Friday, 7:00 am to 9:00 pm.

Outside these times, penalty rates apply:

  • Monday to Friday before 7am or after 9pm: +25% (time-and-a-quarter).
  • Saturday: +50% (time-and-a-half).
  • Sunday: +75% (time-and-three-quarters).
  • Public holidays: +225% (double-time-and-a-quarter).

For example: An adult casual Level 2 working Sunday would earn ~$28.00 × 1.75 = ~$49.00 per hour.

Step 6: Calculate Overtime (If Any)

Overtime is any work beyond 38 hours per week or outside the ordinary spread of hours.

Rates:

  • First 2 hours of overtime: 150% (time-and-a-half).
  • After 2 hours: 200% (double time).
  • Sunday overtime: 200% (double time) regardless of first 2 hours.

Step 7: Use the Fair Work Ombudsman's Pay Calculator

Do not guess. Use the free Pay and Conditions Tool (PACT).

Enter your shop location, employee age, classification, and hours – it will output the exact minimum rate.

Final warning: Underpayment is a serious offense. The FWO has recovered over $500 million for underpaid workers. When in doubt, pay more than the minimum, not less.

In summary, determining the correct award rate requires seven steps. Create a cheat sheet for each employee, update rates every July 1, and always keep a copy of the Retail Industry Award handy.