Modern award wages are rising 4.75%. Here is what employers need to do before 1 July 2026.
- Effective HR
- Jun 6
- 4 min read
The Fair Work Commission has handed down its Annual Wage Review 2026 decision. From the first full pay period on or after 1 July 2026, modern award minimum rates will rise by 4.75%. The change affects around 2.8 million award-reliant employees across Australia. A further 100,000 of the lowest-paid award workers will receive a larger increase through a structural adjustment to their classifications.
The National Minimum Wage, which applies only to employees who are not covered by an award or enterprise agreement, rose separately by just under 6%, from $24.95 to $26.44 an hour ($1,004.90 a week). For most employers, that is not the number that matters. If your people are award-covered, 4.75% is your figure.
What you actually need to do about it is a different question, and the answer depends on your organisation.
What the wage decision changes
The Annual Wage Review is conducted each year to decide whether minimum wages should increase and by how much. This year's decision flows through to:
Employees covered by modern awards
Employees on the National Minimum Wage
Junior employees, apprentices and trainees
Employees whose pay rates are linked to an award minimum
In short, the Commission has confirmed that modern award minimum wages increase by 4.75%, the National Minimum Wage moves to $26.44 an hour, and the new rates apply from the first full pay period commencing on or after 1 July 2026.
Why this matters, even if you pay above award
A common assumption is that paying "above award" means a wage increase does not apply to you. That is not always the case.
When award rates rise, you still need to be confident that every employee continues to receive at least their minimum entitlement once you account for base rates, penalty rates, overtime, allowances, loadings, including annual leave loading, and any annualised salary arrangement. A modest increase to award rates can quietly create an underpayment if those arrangements are not checked against the new rates.
For some organisations a review will confirm you are already compliant and no change is needed. For others it will surface something that needs attention before 1 July. Either way, the only way to know is to look.
The risks we see most often
Every year we help businesses that discover one of the following only after a review:
Incorrect award classifications. Employees classified at the wrong level for years, which means the increase compounds an existing problem rather than creating a new one.
Outdated payroll settings. Pay tables, allowances and rates that need to be updated by hand, and do not change on their own when the award moves.
Salary absorption assumptions. Annual salaries assumed to "absorb" every award increase automatically. Sometimes they do, often they do not, and it should always be checked.
Enterprise agreement obligations. Agreements that require rates to stay above the relevant award. When the award rises, the agreement may need a fresh look.
Actions required before 1 July
These are the same four steps we are walking our clients through. Work through them in order before the new rates take effect.
Check and update your payroll configuration. Update award pay tables, rates, allowances and loadings so your first pay run on or after 1 July processes the new rates correctly.
Plan your communications and change management. Before you tell staff, map out what is changing, who it affects and how you will explain it, so the message lands clearly and consistently.
Review your flat-rate, loaded-rate and salaried employees. Re-run the better off overall test (BOOT) on these arrangements to confirm they still cover the new award minimums once penalties, overtime, loadings (including annual leave loading) and allowances are factored in.
Review your classifications and contracts. Confirm each employee is on the correct award and classification, and that their contract reflects your current obligations. Update where appropriate.
If you are covered by an enterprise agreement, add a review of your agreement obligations to the list, and factor in any back-pay where a gap is identified.
Taking action now is far less costly than unwinding an underpayment later.
How Effective HR can help
An experienced wages auditor, trusted by 500+ organisations, Effective HR has reviewed 5,000+ employment contracts and supported more than 10,000 workers to be paid correctly under their award.
Our HR and Industrial Relations specialists can help with:
Modern award interpretation
Employee classification reviews
Payroll and wage compliance audits
Salary and loaded-rate (BOOT) assessments
Enterprise agreement compliance
Payroll system reviews
Back-pay calculations where required
Whether you employ one award-covered person or hundreds, we can help you move into the new financial year compliant and confident.
Talk to us
The 1 July increase is a natural moment to check that your pay practices line up with your obligations under the Fair Work Act and the applicable modern awards. If you would like a hand understanding how the increase affects your workforce, book a free consult or get in touch. We will look at your awards, classifications and payroll practices and help you work out what, if anything, needs to change.
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