The Fair Work Commission's 2025–26 Annual Wage Review lifted modern award minimum wages by 4.75%, and the National Minimum Wage to $1,004.90 a week ($26.44 an hour) — above $1,000 a week for the first time. The new rates apply from the first full pay period starting on or after 1 July 2026. If you employ anyone on award rates, your July payroll needs the new numbers in it now.
What actually changed
Two separate things moved on 1 July:
- Modern award minimum wages rose 4.75%. Every classification level in every modern award. If you pay exactly the award minimum, your minimum pay obligation just went up by 4.75%. Penalty rate percentages didn't change — but because they're calculated on the base rate, the dollar amounts of penalties, overtime and casual loading all rise with it.
- The National Minimum Wage rose to $26.44 an hour. This is the floor for award-free employees. Most SME staff are award-covered, so for most businesses the award increase is the one that matters.
Allowances set in dollar terms (tool allowances, meal allowances and the like) are also re-set in each award instrument — they don't simply move by 4.75%, so check the updated award or the Fair Work pay tools for the exact new amounts rather than multiplying the old figure.
The date trap: “first full pay period”
The increase doesn't apply from 1 July itself — it applies from the first full pay period starting on or after 1 July. If your pay week runs Wednesday to Tuesday, the new rates start from the first Wednesday in July, not mid-week. Applying them late is underpayment from that date; applying them a few days early is simply a small overpayment you can choose to make for simplicity.
What to do this week
1. Update your payroll rates. If your payroll platform applies award updates automatically, verify it actually has — open a July pay run and check a known classification against the updated award rate. If you maintain rates manually, update every award-covered classification now.
2. Check your above-award staff. Paying above the award doesn't exempt you — it just gives you buffer. A 4.75% rise shrinks the margin between what you pay and what you must pay. Anyone whose buffer was under 4.75% is now being underpaid. Annualised salaries that absorb penalties and allowances need the same check: the award floor they're measured against just moved.
3. Re-cost your labour. For a business with staff on or near award minimums, wages are typically the largest cost line, and it just rose by up to 4.75% — plus 12% superannuation on top of the higher base. Illustrative example: a full-time employee on an award rate of $1,000 a week costs roughly $47.50 more per week in base pay, plus about $5.70 more in super — around $2,750 a year, per employee, before penalties. Multiply by your headcount and put it in the cash flow forecast.
4. Don't forget the other 1 July change. Payday super also commenced on 1 July 2026 — superannuation is now due with each pay run and must reach each employee's fund within 7 business days of payday. If you're updating payroll settings for the new rates, verify your super payment timing in the same sitting. (We've covered payday super compliance in detail separately.)
FAQ
Do I have to give everyone a 4.75% pay rise?
No. The increase applies to award (and national) minimum rates. Employees paid above the new minimums have no automatic entitlement — though contracts, enterprise agreements and retention pressure are separate questions worth thinking through deliberately rather than by default.
Where do I find the exact new rate for my award?
The Fair Work Ombudsman's pay tools and the updated award instruments carry the authoritative new rates. Start with your award — our plain-English guides to all 122 modern awards explain which award applies and how its pay structure works, and every current dollar figure defers to the official Fair Work source.
What if I've already run a July pay under the old rates?
Fix it in the next run and back-pay from the date the increase applied. Underpayment identified and corrected promptly is a very different conversation from underpayment discovered by an auditor two years later.
Sources: Fair Work Commission, Annual Wage Review 2025–26 decision; Fair Work Ombudsman, Annual Wage Review; Australian Taxation Office, payday super. Rates current as at 2 July 2026. General information, not advice.
Not sure whether your payroll picked up the new rates? Our free Business Health Check takes five minutes, or talk to the People Hub about award-compliant managed payroll.
About the author
Nick Lucock
Chief Executive Officer, Valont
Nick leads Valont's day-to-day operations across Finance, People, Operations and Growth. He writes about how the work actually gets done — the processes, systems, and tools that keep Australian SMEs compliant and growing.
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