On 3 June 2025, the Fair Work Commission handed down its Annual Wage Review 2025–2026 decision, confirming a 3.5% increase to minimum wage rates under all Modern Awards, effective from 1 July 2025.

This increase, which applies from the first full pay period on or after 1 July 2025, will impact a wide range of employees across all industries. Employers should now review pay rates, adjust payroll systems, and assess how this affects both award-based and salaried staff.

As part of its legal obligation to maintain minimum wage standards in Australia, the Fair Work Commission conducts this review annually, taking into account a range of economic factors including cost of living, inflation, productivity, and broader economic conditions.

What’s Changed?

• All Modern Award minimum wages will increase by 3.5%.
• The National Minimum Wage (NMW) will also rise, though it applies only to a small number of employees not covered by awards or enterprise agreements.
• Award allowances are yet to be updated and are expected to be released on 1 July 2025.

This annual review ensures minimum wages reflect current economic conditions, inflation, and the cost of living.

What Employers Should Do

• Review and adjust wages for award-covered employees before 1 July 2025.
• Ensure employees on salaries remain better off overall than they would be if they were on hourly rates, taking into account penalties, overtime, and allowances.
• All employers with employees covered by an annualised salary clause in an Award should ensure that they comply with their obligations under that clause.
• Update payroll systems and employment contracts accordingly.
• Be prepared to implement further changes once allowance updates are released.

Failure to comply with minimum wage requirements can result in significant penalties and legal exposure.

Superannuation Guarantee Contribution (SGC) Rate Increase

From 1 July 2025, the Superannuation Guarantee Contribution (SGC) rate will also increase from 11.5% to 12%. Employers must ensure this increased contribution is applied to all eligible employee earnings from that date. This change should be implemented alongside wage increases to ensure full compliance with employer obligations.

Need Assistance?

If you’re unsure how these changes affect your business or want to ensure your payroll and employment practices are fully compliant, our team is here to help.

Contact Robert Lamb or John Davies at Hillhouse Legal Partners on 07 3220 1144, or via john@hillhouse.com.au or robert@hillhouse.com.au.