The Fair Work Commission has announced increases to the National Minimum Wage and modern Award minimum pay rates, which will apply from the first full pay period commencing on or after 1 July 2026.

 

What has changed?

 

Modern Award Wage Increase

Minimum wage rates contained within modern Awards will increase by 4.75%.

 

National Minimum Wage Increase

​

The National Minimum Wage will increase from $24.95 per hour to $26.44 per hour, equivalent to $1,004.90 per week for a full-time employee working 38 ordinary hours per week.

​

Changes to Entry-Level Award Classifications

​

The Fair Work Commission has also commenced a phased process to remove the lowest classification levels contained in modern Awards.

​

These classifications are commonly referred to as:

 

• C14 – Introductory Level Employee

• C13 – Basic Entry Level Employee

• C12 – General Entry Level Employee

​

Historically, these classifications have been used in some Awards to recognise employees undertaking introductory or basic duties.

​

As part of the Commission's decision:

​

• C13 rates will progressively increase towards the C12 classification rate.

• C14 rates will also increase proportionally.

• Over time, these lower classifications will be phased out altogether.

​

The intent is to ensure Australia's lowest-paid workers receive greater protection and maintain purchasing power during ongoing cost-of-living pressures.

​

Why Did the Fair Work Commission Make This Decision?

​

The Commission noted that although inflation has moderated, the real value of Award wages remains below pre-pandemic levels due to the significant inflation experienced between 2021 and 2024.

​

While the increase does not fully close that gap, the Commission considered it appropriate to ensure that Award-reliant employees are generally not worse off in real terms compared to the previous year.

​

What Employers Should Do Now

​

We strongly encourage businesses to review their employment arrangements before the first full pay period after 1 July 2026.

​

Key areas to review include:

​

Employment Classifications

​

Ensure employees are correctly classified under the applicable Award.

​

Minimum Pay Rates

​

Confirm that all employees are receiving at least the new minimum Award or National Minimum Wage rates.

​

Salaries and Above-Award Arrangements

​

Review:

​

• annual salaries

• above-Award rates

• flat-rate arrangements

• all-inclusive rates

​

to ensure employees remain better off overall after the increase.

​

Overtime, Penalties and Allowances

​

Remember that wage increases often impact:

​

• overtime rates

• penalty rates

• allowances

• loadings

​

Review these carefully to avoid unintended underpayments.

​

Enterprise Agreements

​

Businesses operating under Enterprise Agreements should also review pay rates to ensure employees remain compliant with minimum wage obligations.

​

A Good Time for a Broader Compliance Review

​

Annual wage reviews are also an excellent opportunity to review your broader people and compliance framework, including:

​

• Employment Agreements

• Policies and Procedures

• Position Descriptions

• Performance Frameworks

• Workforce Planning

• Payroll Compliance

• Award Classification Reviews

​

Many businesses update pay rates but overlook the systems and documentation that support compliance.

​

Need Help?

​

At @The Office, we help businesses of all sizes navigate workplace compliance, workforce planning, performance frameworks and people strategy.

​

​

​

​