- Published
The Fair Work Commission (FWC) has announced a 6% increase to the National Minimum Wage and a 4.75% increase to minimum award wages, effective from 1 July 2026.
The decision will see the National Minimum Wage increase to $26.44 per hour or $1,004.90 per week.
The FWC noted that many award-reliant and minimum wage workers have not yet recovered the real value of wages lost during the inflation spike of recent years. The decision reflects a continued focus on supporting low-paid workers while balancing broader economic conditions and employer capacity. Read the full decision here.
This change affects a wide range of employees across most industries. It also means associated penalty rates and allowances may increase depending on the Award.
Updated pay guides will be published by the Fair Work Commission in the coming weeks.
What employers need to consider
This increase may affect:
- Employees paid under Modern Awards
- Salaried employees who must remain better off overall than Award entitlements
- Annualised salary arrangements
- Flat rates and Individual Flexibility Arrangements (IFAs)
- Payroll systems and labour cost budgets
Employers should ensure that no employee is paid below the new minimum rates from the first full pay period on or after 1 July 2026.
Frequently Asked Questions
What if we already pay above the award?
If you currently pay above the award minimum rate, we recommend checking the new (increased) pay rates and ensuring the current pay rate for each employee is still at or above the new minimum.
You are not required to increase pay rates if they remain the same as or better than the new minimum rates (however, you can if you wish to).
Are allowances impacted?
Some allowances will also be impacted by the increase. Where an allowance is expressed as a percentage of the ‘standard’ rate (which is linked to the wage of a particular classification in the Award) or considered an ‘all-purpose allowance’, these allowances will generally increase in line with the ‘standard rate’.
You should check the allowances applicable to your team once the FWC has updated the Awards and pay guides, and also check that any applicable superannuation is calculating correctly.
We use flat rates or IFAs — does this affect us?
Yes. Employers using flat rates or IFAs must ensure employees are still better off overall compared to applicable Award entitlements. A full review of loadings, penalties and allowances is recommended.
We have salaried employees — what should we check?
Employees paid annual salaries may be impacted in different ways depending, for example, on whether they are:
- Covered by an Award or EA;
- Award free; or
- Covered by an Award containing ‘annualised wage’ provisions.
We recommend reviewing the above, along with individual employee circumstances to ensure compliance.
What about Enterprise Agreements (EAs)?
Employers should undertake a review of their enterprise agreement (EA) rates to ensure the increased Award rates don’t ‘leapfrog’ the enterprise agreement rates. Where they fall behind, EA rates should be increased to (at least) match the new Award minimum rates.
Employers who have committed to annual wage increases in their Enterprise Agreements should also review these provisions and take action accordingly.
Payday Super – additional payroll consideration
Employers should also be aware of the upcoming Payday Super changes, which will require superannuation to be paid more frequently in line with pay cycles. While separate from the wage increase, it adds further pressure on payroll systems, cash flow planning and compliance processes.
Need Support?
This is a yet another change for employers this year, and wage compliance remains a significant area of focus for the Fair Work Ombudsman so it’s important you get it right. Unfortunately, it’s also tedious and time consuming so let us help you!
Reach out to our team of experts to understand how this decision may impact your business or to discuss how we can look after your wage assessment compliance needs.
