Background
Under s285 of the Fair Work Act 2009 (Cth), the Fair Work Commission (FWC) is required to conduct an annual wage review each financial year.
The purpose of this review is to make the National Minimum Wage (NMW) order, which applies to any working Australian who is not covered by a modern award or enterprise agreement. Secondly, for those working Australians which are covered by an award, the review is also to evaluate the minimum wage rates that are prescribed to the modern awards and to consider if they also need to be adjusted.
Changes
On 2 June 2026, the FWC announced a 4.75% rise in award rates.
Additionally, the new national minimum wage will be $26.44 per hour, increased from $24.95. This equates to $1,004.90 per week, based on a full-time 38 hour week.
This change will come into effect from 1 July 2026 and will apply to approximately 3 million Australians. The increase ensures that the one in five employees who are paid according to the national minimum wage and award wages are not worse off in comparison to where they were in July 2025.
It has been stated that a larger increase would not be “practicable or responsible” given the current “uncertain” economic conditions. This has been influenced by the rate of inflation which increased more than the Reserve Bank of Australia’s forecast, as well as the Middle East conflict, adding ambiguity to the mix.
How this impacts your workplace
As an employer, you need to ensure that employee’s pay is aligned with these changes. This may involve updating payroll systems, employment contracts, annualised salary arrangements and budgeting assumptions to ensure compliance from the start of the new financial year.
It is also strongly encouraged to communicate changes to employee pay rates by issuing letters to advise of how they will be impacted by the wage review.
Additionally, if your employees are paid above the minimum wage rate, this is still a good time to review pay rates and evaluate whether rates should be increased to meet the demands of the rising cost of living.
Contact us via the link below for guidance on how to manage the annual wage review in your business or to provide assistance with ensuring your workplace stays compliant.