Paying your employees incorrectly is one of the most common — and costly — mistakes small trade businesses make. Underpaying staff, even accidentally, exposes you to Fair Work back-payment orders, civil penalties, and significant reputational damage. Getting wages right starts with understanding which award applies to your trade business and what the minimum rates are for 2026.

This guide covers the key modern awards covering trade businesses, the current minimum rates, how to calculate correctly, and what happens if you get it wrong.

Which Award Covers Your Trade Business?

Australia's Modern Award system sets minimum wages and conditions for different industries and occupations. Tradies fall under several awards depending on the type of work:

Building and Construction General On-site Award 2020

Covers workers on commercial and residential construction sites, including:

  • Carpenters, joiners, plasterers, painters
  • Concreters, bricklayers, waterproofers
  • Scaffolders, riggers
  • General construction labourers

Electrical, Electronic and Communications Contracting Award 2020

Covers electricians and electrical workers, including:

  • Electrical contractors working in domestic and commercial settings
  • Apprentice electricians
  • Communications cablers

Plumbing and Fire Sprinklers Award 2020

Covers plumbers and related trades:

  • Plumbers (domestic, commercial, industrial)
  • Gasfitters
  • Drainers
  • Fire sprinkler fitters

Manufacturing and Associated Industries and Occupations Award 2020

Covers some workshop-based fabrication work, metalwork, and HVAC manufacturing.

Vehicle Manufacturing, Repair, Services and Retail Award 2020

Covers mechanics, panelbeaters, auto electricians, and automotive trades.

How to confirm which award applies: Use the Fair Work Commission's award tool at fairwork.gov.au. Enter the employee's job description and industry, and the correct award will be confirmed. If you're unsure, call the Fair Work Infoline on 13 13 94.

The 2025–26 Minimum Wage Increase

The Fair Work Commission reviews minimum wages annually and typically announces changes effective from the first full pay period on or after 1 July.

For the 2025–26 year, the National Minimum Wage is $24.10 per hour (or $915.90 per 38-hour week). Award rates are set at or above this minimum.

Note: Always check the Fair Work website for the current rates — these are indexed and can change. The figures below are based on 2024–25 award rates with indicative 2025–26 increases.

Building and Construction General On-site Award: Key Rates (2025–26)

Employee Classifications

The Building Award uses classifications that determine pay rates:

CW1 — Construction Worker Level 1 (General Labourer)

  • Basic hourly rate: approximately $28.50/hour
  • Works under direct supervision, no trade qualification required

CW2 — Construction Worker Level 2 (Trades Assistant, Semi-Skilled)

  • Basic hourly rate: approximately $29.50/hour
  • Some technical skills, often supports qualified tradies

CW3 — Level 3 (Tradesperson, Finished Apprentice)

  • Basic hourly rate: approximately $31.00/hour
  • Fully qualified tradespeople with Certificate III

CW4 — Level 4 (Advanced Tradesperson)

  • Basic hourly rate: approximately $32.50/hour
  • Additional skills or supervisory responsibilities

CW5 — Level 5 (Specialist)

  • Basic hourly rate: approximately $34.00/hour
  • Specialist technical or supervisory role

These are base rates only — not total remuneration. Additional allowances, penalty rates, and loadings apply on top.

Apprentice Rates Under the Building Award

Apprentice wages are calculated as a percentage of the qualified tradesperson rate:

  • 1st year — 42% — ~$13.00
  • 2nd year — 55% — ~$17.05
  • 3rd year — 75% — ~$23.25
  • 4th year — 88% — ~$27.28

Rates vary by age (adults vs school leavers). Check fairwork.gov.au for exact rates applicable to your apprentice's circumstances.

Electrical Contracting Award: Key Rates (2025–26)

Electrician Classifications

Electrical Tradesperson (ET)

  • Standard qualified electrician
  • Basic hourly rate: approximately $35.00–$38.00/hour (varies by state licensing requirements and employer type)

Electrical Tradesperson — Special Class (ETSC)

  • Additional qualifications or responsibilities
  • Basic hourly rate: approximately $39.00–$41.00/hour

Electrical Linesperson

  • Rates vary significantly by classification

Apprentice Electrician Rates

  • 1st year — 40% — ~$14.00
  • 2nd year — 55% — ~$19.25
  • 3rd year — 75% — ~$26.25
  • 4th year — 88% — ~$30.80

Note on adult apprentices: Adult apprentices (over 21) attract a higher minimum wage under some awards. Fair Work rules protect adult apprentices from receiving below minimum wage in some circumstances.

Plumbing and Fire Sprinklers Award: Key Rates (2025–26)

Plumber Classifications

Plumber and Drainer, Gasfitter — Tradesperson

  • Basic hourly rate: approximately $35.50–$38.50/hour

Advanced Tradesperson

  • Rate above standard tradesperson — applies to licences beyond standard plumbing trade certificate

Plumbing Apprentice Rates

  • 1st year — 42% — ~$14.90
  • 2nd year — 55% — ~$19.53
  • 3rd year — 75% — ~$26.63
  • 4th year — 88% — ~$31.24

Allowances — Often Overlooked, Always Required

Award rates are base wages only. Most trade awards include mandatory allowances that must be paid in addition to base rates:

Tool Allowance

Employers are required to pay a tool allowance to fully qualified tradies who supply their own tools. Under the Building Award, this is typically $25–$35 per week for qualified tradies. Electricians' and plumbers' awards have their own tool allowance rates.

Common mistake: Not paying tool allowances because "they should bring their own tools." If your employee uses their own tools as required by the job, the allowance is mandatory.

Meal Allowance

If an employee works more than 1.5–2 hours of overtime without prior notice, a meal allowance is payable — typically $17–$22 per overtime meal. This is not just a nice gesture; it's an award entitlement.

Wet Weather Allowance

Some construction awards require additional pay or allowances when workers are required to work in wet weather conditions. This varies by state and award.

First Aid Allowance

If an employee holds a current first aid certificate and is designated as the first aid officer, an additional hourly allowance is payable (varies by award, but typically $0.40–$1.00/hour).

Distant Work / Travel Allowances

If employees travel to distant worksites and require accommodation, the award specifies minimum payments for accommodation, meals, and travel. These are different from general workplace vehicle use.

Penalty Rates and Overtime

Award rates are not flat all-week. Different rates apply for different times and circumstances:

  • Ordinary hours (Mon–Fri) — 100% (base rate)
  • Saturday — 150% (first 2 hours) / 200% (after)
  • Sunday — 200%
  • Public holidays — 250% (or a day off in lieu)
  • Overtime (after ordinary hours) — 150% (first 2 hours) / 200% (after)

Rates vary by award. Some awards have different Saturday/Sunday loadings. Check your specific award.

Casual employees receive an additional 25% loading on all hours worked in lieu of annual leave, sick leave, and other entitlements. A casual tradesperson earning the CW3 base of $31.00/hour would be paid $38.75/hour as a casual.

What You Must Pay in Addition to Wages

Award wages are only part of the cost of employment. On top of wages:

Superannuation: 11.5% of ordinary time earnings (2025–26) paid into the employee's nominated super fund. Due quarterly.

Annual Leave: 4 weeks per year for full-time employees (pro-rated for part-time). Annual leave is paid at the employee's ordinary rate when taken. Leave loading (17.5%) applies on top of ordinary leave pay in most trade awards.

Sick/Personal Leave: 10 days per year for full-time employees. Paid at the ordinary rate.

Long Service Leave: After 7–10 years (varies by state), employees are entitled to long service leave. Typically 2 months after 10 years, or pro-rated after 7 years in some states.

Workers Compensation: Compulsory insurance premium paid by the employer (see the workers compensation guide for your state).

Payroll Tax: If your total wages bill exceeds the state threshold (approximately $900,000 in NSW, $700,000 in VIC), payroll tax applies at approximately 4.85–6.85% of wages above the threshold.

Calculating the True Cost of an Employee

For a qualified CW3 carpenter at $31.00/hour working 38 hours per week:

  • Base wages (38 hours × $31) — $1,178
  • Tool allowance — $32
  • Super (11.5% of ordinary earnings) — $138
  • Workers comp (estimate 4% of wages) — $48
  • Annual leave loading provision (1/8 of wages) — $151
  • Sick leave provision (10 days/year) — $46
  • Total true weekly cost — $1,593

This means hiring a $31/hour carpenter actually costs approximately $41.90/hour in total employment cost — a 35% premium over the base rate. If you're billing the carpenter's time out at $65/hour and paying $42/hour all-in, your margin on that labour is around 35% — before overheads.

This calculation is essential for setting charge-out rates correctly.

Common Payroll Mistakes in Trade Businesses

1. Using the Casual Rate for Long-Term Workers

If a "casual" employee has a regular and systematic pattern of work — same hours every week, expected to be available, rarely knocked back — Fair Work may classify them as permanent. Permanent employees have different entitlements (annual leave, sick leave, notice periods). Misclassifying a permanent worker as casual can result in significant back-payment claims.

2. Not Paying Allowances

Tool allowances, meal allowances, and first aid allowances are award entitlements — not optional. If your employment contracts don't account for these, you're likely underpaying.

3. Underpaying Overtime

Some employers pay the same hourly rate for all hours worked, assuming the employee is "happy with it." This doesn't override the award. Overtime rates are mandatory.

4. Not Updating Rates Annually

Award rates change on 1 July each year. If you don't update your payroll from 1 July, every week after that your employees are underpaid. Good payroll software (Xero, MYOB) will prompt you to update rates when the new minimum wages are announced.

5. Treating Subbies as Employees Without the Proper Setup

If you engage subcontractors who work like employees (regular hours, your tools, one client), Fair Work may classify them as employees. This means you owe them all employee entitlements — back-dated. For high-risk arrangements, get advice from an employment lawyer.

What Happens if You Underpay Staff?

Back-payment: The Fair Work Act requires you to repay all underpaid amounts, potentially going back years.

Penalties: Civil penalties of up to $16,500 per contravention for individuals, $82,500 for companies. Serious or repeated underpayment — including where wage theft is deliberate — can now result in criminal prosecution with penalties up to 10 years imprisonment under the Closing Loopholes legislation.

Interest and costs: In some proceedings, you may also face interest on unpaid amounts and the employee's legal costs.

The self-audit process: Once a year, sit down with your payroll records and verify that the rates paid match the current award rates, including allowances. Your accountant or a Fair Work consultant can assist with this review.

Using the Fair Work Website

The Fair Work Ombudsman website (fairwork.gov.au) provides:

  • Pay calculator tools for specific awards
  • Free pay slips templates
  • Award summaries
  • Information on employee entitlements and employer obligations

If you're unsure about any entitlement, calling the Fair Work Infoline (13 13 94) is free and provides binding guidance for employers and employees.

Frequently Asked Questions

Q: Can I pay my employee more than the award rate?
Yes. The award is a minimum. Many trade businesses pay above award to attract and retain skilled workers. An "above award" rate must still comply with all other obligations (super, leave entitlements, allowances).

Q: My apprentice is on a government subsidy — does the award still apply?
Yes. Government subsidies (Australian Apprenticeships Incentives, state-based subsidies) don't change your obligation to pay at least the award minimum. Subsidies are paid to you as the employer to reduce the net cost, not to reduce the award entitlement.

Q: Can I have an employment contract that overrides the award?
Only if the contract creates a better overall outcome than the award. Individual Flexibility Arrangements (IFAs) allow some award conditions to be varied by agreement, but the employee must be better off overall. You cannot contract below the award minimum.

Q: What's the difference between an enterprise agreement and an award?
An enterprise agreement (EBA) is a negotiated document between an employer and employees (often with union involvement) that sets out pay and conditions for that specific workplace. An EBA overrides the relevant modern award for covered employees. Enterprise agreements must provide conditions at least as good as the relevant award.