The Fair Work Commission (FWC) has recently completed its Annual Wage Review and advised of increases to the National Minimum Wage and minimum pay rates in modern awards.
Below is a plain-English summary of what’s changing, when it takes effect, and the practical steps small business employers should take to stay compliant.
At a glance (Annual Wage Review 2026)
- Modern award minimum wages: increased by 4.75%
- National Minimum Wage: increased to $26.44 per hour (or $1,004.90 per week)
- When it starts: from the first full pay period starting on or after 1 July 2026
- Key action for employers: check awards/classifications, update payroll, and confirm any flat rates/salaries still meet award obligations
The Details:
What did the Fair Work Commission decide?
Following the 2026 Annual Wage Review, the FWC has increased:
- The National Minimum Wage (NMW) by approximately 6%, taking it from $24.95 per hour ($948 per week) to $26.44 per hour ($1,004.90 per week).
- Minimum wages in all modern awards by 4.75%.
It’s worth noting that while a relatively small number of employees are paid on the National Minimum Wage, most employees are covered by a modern award. That means, for many small businesses, the bigger day-to-day impact is likely to be the 4.75% increase to award minimum rates.
When do the new rates start?
The increases apply from the first full pay period starting on or after 1 July 2026.
That wording matters. It doesn’t necessarily mean “from 1 July” for every business; it depends on your pay cycle.
For example:
- If your weekly pay period starts on Wednesday, the new rates apply from Wednesday 1 July 2026.
- If your weekly pay period runs Monday to Sunday, and 1 July falls mid-cycle, the new rates apply from the next full pay period (e.g., Monday 6 July 2026).
National Minimum Wage vs award wages: what’s the difference?
This is a common point of confusion.
- National Minimum Wage applies to employees who aren’t covered by a modern award or an enterprise agreement.
- Modern awards set minimum pay rates and conditions for employees in particular industries or occupations (for example, hospitality, retail, clerical/admin, manufacturing, and many more).
If you’re not 100% sure which award applies to your employees, it’s important to check, because the correct award determines not just base rates, but also things like:
- penalty rates
- overtime
- allowances
- minimum engagement periods
- classification levels
What employers should do now (practical compliance checklist)
Here’s a simple checklist to help you stay compliant.
1) Confirm which employees are award-covered (and, if so, which award applies)
If you have a mix of roles (for example, admin + warehouse + sales), you may have employees covered by different awards or different classifications within the same award.
If you’re unsure, use the Fair Work Ombudsman’s tools to consider Award coverage and/or reach out to us for assistance.
2) Check employee classifications and pay points
Award rates depend on an employee’s classification (and sometimes pay point or year of experience). If someone has moved into higher duties over time, their classification may need updating too.
This is a good time to check:
- position descriptions vs actual duties
- classification level
- whether any trainees/apprentices/juniors have moved to a new age bracket or stage
3) Update payroll systems and pay templates
Once the new rates apply for your first full pay period on or after 1 July 2026, you’ll need your payroll system to reflect:
- updated base rates
- any adjustments to award-linked allowances
- penalty rates and overtime calculations (where these are calculated as a percentage of base)
If you outsource payroll, make sure your provider has a clear plan in place to make the necessary adjustments.
4) If you pay “above award”, do a quick check anyway
Many small businesses pay above-award rates or use salary packages, annualised salaries, or “flat rates” that are intended to exceed minimum Award requirements. Even if you do, it’s still important to confirm that after the July wage increase:
- the employee’s pay still meets or exceeds the new minimums, and
- the arrangement still leaves you compliant with any award requirements.
This is especially important where employees regularly work overtime, weekends, early starts/late finishes, and/or you have them on higher rates that are intended to “absorb” these and other Award payments such as allowances and annual leave loading. Increases to Award rates can mean that, over time, what were once over-Award payments no longer meet requirements.
5) If you have an enterprise agreement, check the base rates
If your business operates under an enterprise agreement, the wage increase may still matter.
That’s because the base rate of pay in an enterprise agreement can’t be less than the base pay rate in the relevant award. If your agreement was made several years ago, it’s sensible to check whether your agreement rates still sit above the updated award rates.
6) Keep good records and communicate clearly
Pay compliance is not just about paying the right amount, it’s also about being able to show how you got there.
Consider:
- keeping a short internal note of when the new rates take effect for your pay cycle
- documenting classification decisions (extra tip: it’s generally a requirement that Award-covered employees are advised in writing of their designated Award classification)
- letting employees know (briefly) when the updated rates will appear in their pay
Common traps we see in small business
A few issues tend to come up every year around Annual Wage Review time:
- Referencing/using the wrong award (or assuming an award doesn’t apply)
- Incorrect classifications (especially where roles have evolved, or individuals have progressed as a result of age, service or qualifications for example)
- Over-Award rates or annual salaries that are no longer sufficient to cover Award “extras” such as penalties/overtime/Annual Leave Loading
- Allowances not updated (or missed entirely)
- Pay period timing misunderstandings (applying the increase too early or too late)
Need a hand?
If you’d like support working through the 2026 minimum wage changes, whether it’s confirming the correct award, checking classifications, reviewing an over-Award/salary arrangement, or reviewing your employment contracts, we can help.
Staying compliant isn’t just about “ticking a box”. It’s about protecting your business, reducing the risk of underpayment issues, and making sure you’re meeting your responsibilities as an employer.
If you want to talk it through, give us a call.
Note that this is general information and a summary of recent changes only. It is not formal or legal advice. Information is current and we believe accurate at the time of publication –05/06/2026.
