National Minimum Wage Increase – What Employers Need to Know

From 1 July 2026, minimum wage rates will increase by 4.75%, impacting many Australian businesses and employees.

When do the new rates apply?

The increased rates must be applied from the first full pay period commencing on or after 1 July 2026.

This means the effective date for implementation may vary depending on your payroll cycle.

Award-Free Employees

For employees who are not covered by a modern award or enterprise agreement, the National Minimum Wage will increase to:

• $26.44 per hour
• $1,004.90 per week (based on a 38-hour week)

Employers should review any employees currently paid at or near the National Minimum Wage to ensure compliance from the applicable date.

Modern Awards and Enterprise Agreements

For employees covered by a modern award, minimum rates of pay will increase by 4.75%.

This increase applies to a range of award entitlements, including:

• Ordinary hourly rates
• Weekly rates of pay
• Overtime rates
• Penalty rates
• Loadings
• Certain allowances

The Fair Work Commission has also confirmed that structural adjustments will apply to some entry-level classifications, including C13 and C14 classifications within applicable awards.

Businesses operating under enterprise agreements should also review their obligations. In some cases, the increase may affect the ongoing compliance of an agreement against the relevant award.

What should employers do now?

At this stage, there is no immediate action required.

The Fair Work Commission is currently finalising updated pay schedules across all modern awards. Once these are released, employers should:

• Review employee classifications
• Confirm updated minimum pay rates
• Assess any impacts on payroll systems
• Ensure rates are updated from the correct pay period
• Review any enterprise agreement obligations

What if you pay above the Award?

Many employers already pay above minimum award rates.

In some circumstances, the wage increase may be absorbed into existing over-award payments, provided the employee’s total remuneration continues to meet or exceed all applicable minimum entitlements.

However, this should be reviewed carefully, particularly where:

• Employees receive individualised rates of pay
• Salaries are intended to offset award entitlements
• Enterprise agreements are in place

Support from Explore Potential

As updated award rates become available, Explore Potential will be reviewing the changes and assisting clients to understand their obligations.

We know that wage increases can create uncertainty, particularly when information is released progressively and reported widely across the media. Our team is closely monitoring developments and will provide practical guidance as further information becomes available.

If you have questions about how the increase may affect your business, employee classifications, payroll practices or employment agreements, please contact our team.

We’re here to help you navigate the changes with confidence and ensure your business remains compliant.

info@explorepotential.com.au
(08) 7095 1830