The Fair Work Commission handed down the Annual Wage Review 2026 decision on Tuesday 2 June. If you employ award-covered staff in Australia, this decision affects your payroll obligations from 1 July 2026. Here is what you need to know and what to do before the change takes effect.
What was decided?
The Fair Work Commission has increased all modern award minimum wage rates by 4.75%. The National Minimum Wage is now set at $1,004.90 per week or $26.44 per hour.
This is not a small adjustment. A 4.75% increase means a meaningful change to your wage costs, particularly if you employ a number of people at or near award minimums. Now is the time to understand exactly what that means for your business.
When does it take effect?
The new rates apply from the first full pay period on or after 1 July 2026. What that means in practice depends on your pay cycle.
If you run weekly pay cycles, the change likely takes effect from the week beginning 1 July. If you run fortnightly cycles, it takes effect from the first fortnight that starts on or after 1 July. If you run monthly cycles, it takes effect from the first monthly pay period that begins on or after 1 July.
Who does it affect?
The decision applies to all employees covered by a modern award or the National Minimum Wage. This includes full-time, part-time and casual employees across all industries where a modern award applies.
Enterprise agreement employees are not directly affected by this decision. However, if your enterprise agreement rates have fallen below the new modern award minimum for any classification, you are required to bring those rates up. This is an area where I often see employers caught out, particularly where agreements were struck several years ago and have not kept pace with award increases.
What should you do right now?
There are four things I would recommend every employer with award-covered employees does before the end of June.
First, confirm which modern awards apply to your workforce. If you are not certain, check the Fair Work Ombudsman’s list of modern awards. You should review the coverage clause to determine if it is applicable. Getting the wrong award, or missing a coverage question entirely, is one of the most common compliance issues I see in small and medium businesses. For further information on award coverage, review our blog here.
Second, check your current pay rates against the new minimums for every classification in your business. This includes base rates, penalty rates, allowances and overtime rates, all of which are set by the relevant award and increase in line with the decision.
Third, update your payroll system before the first full pay period after 1 July. Do not leave this to your payroll provider to handle automatically without checking. Confirm the update has been applied correctly and that the right rates are flowing through to the right employees.
Fourth, if you have annualised salary arrangements in place, check that those salaries still absorb all minimum award entitlements at the new rates. An annualised salary that was compliant last year may fall short once the 4.75% increase is applied, particularly where overtime or penalty rate components are involved.
A note on underpayment
Underpayment obligations under the Fair Work Act 2009 include back pay, civil penalties, and since the introduction of the Closing Loopholes legislation, potential criminal liability for intentional wage theft. Getting the review done now costs far less than fixing a problem after the fact.
Not sure where to start?
If you are unclear which awards apply to your business, want someone to review your pay rates before July, or simply want a second pair of eyes on your payroll compliance, we are here to help. This is exactly the kind of work we do with small and medium businesses across Australia.
You can book a call directly at thehrimpact.com.au. We will take a straightforward look at where you stand and tell you honestly what needs attention before the change takes effect.
This article is for general informational purposes only and does not constitute legal advice. For advice specific to your circumstances, please seek appropriate professional guidance.