Fair Work Commission ruling to phase out junior pay rates in the pharmacy sector

A structural shift for pharmacy businesses

Junior pay rates have long underpinned the economics of many pharmacy businesses. That foundation is now shifting.

In a landmark Fair Work Commission ruling, the Commission has confirmed it will phase out junior pay rates for adult employees across pharmacy, retail and fast food, while retaining them for workers under 18.

The change will directly impact wage structures under the Pharmacy Industry Award and reshape how pharmacy businesses manage labour costs.

The transition will begin in December and be introduced gradually over several years. Currently, employees under 21 are paid a percentage of the adult rate, starting at around 70 per cent for 18-year-olds and increasing with age.

Under the new approach, younger adult workers will move onto full adult wage rates earlier in their employment, with pay increasing incrementally until it aligns with standard adult wages.

This effectively resets a long-standing benchmark in Australia’s wage system, recognising 18 as the starting point for adult pay rather than 21.

Rising pharmacy wages and cost pressure

For pharmacy owners, the implications are immediate.

In many community pharmacies, employees aged 18–20 make up a significant share of retail and support staff. Labour is also one of the few controllable costs in a business where revenue is largely constrained by PBS funding and competitive retail pricing.

As junior pay rates are phased out, wage costs for entry-level roles will rise, placing additional pressure on already tight margins.

Pharmacies with a higher proportion of younger staff are likely to feel this shift most, particularly as employees move into higher pay brackets over time.

Some flexibility remains. Junior rates will still apply for workers under 18 and during the early months of employment, preserving a limited buffer for onboarding and training.

Rethinking the pharmacy workforce model

Beyond cost pressures, the decision challenges a long-standing workforce model in pharmacy.

Businesses that have relied on lower-cost junior labour will need to reassess how work is structured and delivered. The focus is likely to shift from cost minimisation to productivity and capability.

This may include:

• investing in staff training to improve output and efficiency
• redesigning roles across dispensary and retail functions
• streamlining workflows and reducing administrative friction

For some operators, it may also accelerate the use of digital tools or automation to support leaner, more efficient teams.

Beyond cost: a more stable workforce

While the immediate impact is higher wages, the longer-term effect may be more positive.

Junior pay structures have historically been linked to higher turnover and shorter tenure among younger workers. Moving employees onto adult wages earlier may support better retention, more consistent training, and stronger team capability.

In a sector already facing workforce shortages, particularly in regional areas, this could help stabilise staffing and reduce recruitment pressure.

There is also a broader equity benefit. Aligning wages with adult status reduces the long-term financial disadvantage faced by younger workers, particularly in areas such as savings and superannuation.

Takeaway

This ruling marks more than a wage increase. It signals a shift in how entry-level labour is valued across the pharmacy sector.

For pharmacy owners, the challenge now is clear: adapt to a higher-cost environment while building a workforce that delivers greater value.

Those who invest in capability, optimise how work gets done, and rethink their staffing models will be better positioned to absorb the pressure and strengthen their business over time.