This article was co-written by Scott Meagher. 

Yesterday, the Fair Work Commission (FWC) approved an increase in minimum wage rates under modern awards by 4.75%. The National Minimum Wage (NMW) will be increased to $1,004.90 per week, or $26.44 per hour. These changes will take effect from 1 July 2026.

The wages paid to the modern award-reliant workforce only constitute about 11.2% of the national “wage bill”, so the direct effect of this review on wages growth across the whole workforce is limited. However, it is significant to lower-paid workers in the community.

In announcing this decision, the FWC said that rising inflation, restrictive monetary policy from the RBA and the “wild card of the Middle East conflict” has meant “that it would not be practicable or responsible in the current uncertain circumstances to award a real wage increase for employees reliant on modern award wage rates that would be sufficient to close the real wage gap entirely. However, we consider that we should at least ensure that modern award-reliant employees generally are not worse off in real terms than they were as at 1 July 2025.” 

As forecasted in previous reviews, there will be more significant changes to the award rates of the lowest paid employees. The C13 wage rate, being the lowest wage rate applicable to ongoing employment, is being phased out in stages. As part of this review, the C13 rate will be increased by an additional amount representing one-third of the difference between the C13 and C12 rates. The C14 rate, being a special entry-level wage rate applicable to a limited initial period of employment, will be increased by the same percentage amount as the C13 rate to maintain its current relativity to C13. These changes have resulted in the lowest modern award wage for ongoing employment being $1,004.90 per week and $26.44 per hour, and the lowest wage rate applicable to entry-level employment for a period of no more than six months being $978.10 per week or $25.74 per hour. 

What does this mean for employers?

The FWC’s decision means that:

  1. Employers who pay their employees at minimum wage rages pursuant to modern awards or the NMW will be required to increase their employees’ rates of pay from 1 July 2026.
  2. Employers who pay their employees under an industrial instrument, such as an enterprise agreement, should review the rates under that instrument to ensure they are equal to or above the applicable minimum wage rates.
  3. Employers who pay their employees above the minimum wage rates and utilise set-off clauses or annualised wage arrangements should review and assess the impact of the minimum wage increases. In particular, they should assess whether increases may be able to be absorbed without making any changes or whether increases or adjustments to those remuneration arrangements may be necessary. 

Please contact our Employment & Labour Team to discuss the impact that these changes may have to your organisation.