The Fair Work Commission has today announced its increase to minimum wages which will become effective from the first full pay period on or after 1 July 2026.

Between the cost-of-living crisis, three(3) x interest rate rises this year, and the ongoing Middle East conflict the decision reflects the Commissioners acknowledgement of the difficult economic context highlighting that this increase it also only partially closes the real wage gap.

Changes take effect from 1 July 2026:

• Increase of 4.75% applying to the minimum wage rates across all modern Awards
• National Minimum Wage (NMW) increased to $26.44 per hour ($1004.90 per week)
• Structural adjustment to the lowest wage categories C14 and C13 – both increasing by an additional 1.2%. These two wage categories (entry level below minimum award rate categories) being phased out.
• The new entry-level minimum(C14) now being $25.74 per hour ($978.10 per week).

Modern Award reliant employees make up about 21.1% of the Australian workforce, a higher percentage in this category being female, part time or casual workers. Retail, Health care, Social Services and Hospitality make up the greater percentage of this group.

The Fair Work Commission has now completed its review of those Awards/Occupations covering mostly female-dominated positions (children’s services, disability care workers, pharmacists, and health professionals). Wage, penalties and allowances have already occurred in these Awards.

They are next looking to review occupations including nurses and flight attendants. Coupled with this the Fair Work Commission has stated it will be reviewing all ‘professional’ classifications prior to the 2027 minimum wage review. This will aim to confirm minimum wage levels for positions that require the worker to be university degree qualified.

It should also be a reminder to the reader that from 1 December 2026, phasing out junior pay rates for 18-20 year olds will commence for the Retail, Fast Food and Pharmacy Industry Awards.

It is likely that your workers (or at least some of them) fall under an Award – even if they are paid well above the minimums.

A few things to consider:

• If your staff are paid in line with the Award – you will need to ensure your payroll system is set up to take into account the new minimum awards rates. Plus review any allowances or penalty payments in line with the new rates.
• Penalty rates and allowances outlined in awards that are linked to pay levels will also go up (this includes leave loading). This means that if your employees are currently receiving an ‘over-award’ salary to cover all the additional amounts set out in the awards, the increase may no longer cover the new award level increases.
• The governments “Closing the Loopholes Bill” now includes the criminalisation of intentional wage underpayments. This means that deliberate failure to review wages resulting in the underpayment of staff will become a criminal offence (penalties and potential jail time).
• Review any staff under 21 who might be on junior rates and get your payroll people prepared for the change to rates later this year for 18 year olds and up

Consider your response when (not if) your non-Award staff come looking for a pay rise. These staff will be looking at the minimum rate percentage increase of 4.75% and thinking they should get that too.

The percentage increase to the minimum wage will apply to:

• Employees under a Modern Award (where they currently are being paid above Award wages you will need to triple check this still meets wage, penalty and allowance minimums).
• Employees who are not covered by an Award or Agreement (national minimum wage would apply).
• Note the coverage definition of the Miscellaneous Award has been broadened and some staff who were deemed a non-Award employee might now be classified under this Award.

With this decision the Fair Work Commission will be working through their pay tools and information sheets which should be available online in the coming days.

But I already pay my staff above award wages… am I exempt from these increases?

This is a common question we often receive from clients. Paying your staff above Award wages does not preclude you from the provisions of the Award, except in certain circumstance and only when documented carefully.

If you are not sure whether your staff are Award employees – check it now. The penalties for breaching Award or Fair Work Act provisions are substantial.

How to ensure compliance from 1 July with new Award rates

1. If you currently pay a salary above minimum Award rates and you are not intending to give pay rises this year, it is a good idea to recheck your employees’ rates against the new minimum Award rates to ensure all your employees continue to be remunerated at or above these amounts.

2. If you have any special payment arrangements (eg not paying overtime, leave loading or a certain allowance or penalty because you pay a higher salary) make sure this arrangement is clearly documented. Don’t rely on a verbal agreement or a quick email to protect you from a future wage claim. There have been some recent cases highlighting unclear “offset clauses” in employment contracts or undocumented arrangements, and they have failed to hold up in court.

3. A quick review of your employment conditions and contracts is a quick, easy and inexpensive way to protect your business.

4. Check your payroll codes for which pay items are flagged as having superannuation paid on them. Eg. Normal hours with a 1.5x penalty rate for working on a Saturday would attract superannuation, overtime hours worked on a Saturday attracting an overtime rate of 1.5x would not.

There are substantial penalties for breaches of the Award and/or the Fair Work Act. It is worth the time for a quick wage check for your businesses peace of mind.

Unsure where to start with award compliance? The Fair Work Commission have a range of online tools available at www.fairwork.gov.au.