The Fair Work Commission (FWC) recently announced its Annual Wage Review decision for 2025–2026, bringing important updates that all small business owners need to be across before 1 July 2025.
Minimum Wage & Award Increases
Effective from the first full pay period on or after 1 July 2025:
- The National Minimum Wage will increase by 3.5%, rising from $915.90 to $948 per week, or $24.10 to $24.95 per hour.
- All Modern Award wages will also rise by 3.5%.
More information on the decision can be found here.
This increase does not automatically apply to businesses operating under Enterprise Agreements, but keep in mind rates of pay in Enterprise Agreements must not fall below the applicable Modern Award minimums. A review of your agreements may be necessary to ensure compliance.
For employers in the aged care sector, note that this increase is in addition to any outcomes from the Aged Care Work Value Case. Make sure you’re prepared to adjust wages accordingly (an additional increase may apply from 1st October 2025). Reach out if you need further details.
The updated Award pay guides from the Fair Work Ombudsman are expected to be available towards the end of June. Keep an eye on our social channels (Facebook or LinkedIn) and we’ll let you know when they “go live”. Once pay guides are updated, they will be available under the relevant Award – see here for the full list of Awards.
What If You’re Already Paying Above the Award?
If you currently pay your employees above the relevant Modern Award minimum rates, either as part of an Employment Contract or as part of an Individual Flexibility Agreement, you may not need to make any changes, so long as your employees’ total pay remains above the new minimums after the increase takes effect.
However, it’s essential to review your pay structure to ensure that:
- Each employee is still being paid correctly based on duties performed for their classification (and that the classification remains appropriate for their role)
- Any applicable allowances or penalty rates are being handled correctly
- You’re maintaining proper documentation to demonstrate compliance
Paying “above Award” isn’t a set-and-forget arrangement – regular reviews are both a compliance requirement and good risk management
(BONUS TIP: It’s also important to ensure that your employment contracts effectively account for any “absorption” of Award entitlements by virtue of over Award payments. Reach out if you need assistance).
Further Award Wage Boosts in Five Key Sectors
In addition to the general wage increase, recent rulings of the Fair Work Commission are set to soon deliver more targeted boosts to five sectors, including pharmacy, early childhood education, health, and those under the Social, Community, Home Care and Disability Services Industry Award.
The Commission has determined that some workers in these predominantly female sectors have historically been undervalued, and the changes seek to adress that issue. Changes will come into effect later this year (if approved). Review this article for further details.
If your business operates in one of these sectors, we suggest that you budget for additional wage increases for the 2025-26 financial year.
Superannuation Rate Increase
By way of reminder, from 1 July 2025 the superannuation guarantee (SG) rate will increase from 11.5% to 12%. This means you’ll need to budget for higher super contributions for your employees, on top of potential wage increases.
What We Suggest You Do Next
- Review your payroll / speak with your payroll provider to ensure new minimum wage rates are applied from the correct pay period.
- Update your superannuation payments to reflect the new SG rate of 12% from July.
- Check any employees paid above Award rates to ensure their pay still meets at least the minimum Award requirements.
- Communicate with your employees to ensure they understand the upcoming changes.
- Seek advice if you’re unsure—particularly if you’re operating under an Enterprise Agreement or in one of the sectors potentially impacted by likely additional wage increases.
Need assistance interpreting the changes? Don’t hesitate to reach out to us—we’re here to help.
This article provides general information which we believe to be correct at the time of posting. Information provided must not be considered professional or legal advice. If you’re an employer and need support that takes into account your particular circumstances, please contact us directly.
