The Fair Work Commission (FWC) has this week announced an increase to the National Minimum Wage and modern award minimum wage rates.
The new National Minimum Wage will be $1,004.90 per week or $26.44 per hour. This constitutes an increase of $56.90 per week to the weekly rate or $1.49 per hour to the hourly rate.
Modern award minimum wage rates will generally increase by 4.75%. However, this increase will not apply uniformly across all classifications, with some lower-paid classifications receiving additional increases as part of the FWC’s decision to phase out C13 classifications.
The increases will take effect from the first full pay period on or after 1 July 2026.
Why such a high increase?
This year’s increase is the second highest increase in the last ten years (with 2023 being the highest where a 5.75% increase was awarded to realign wages after the pandemic).
The FWC stated that the determination of this year’s review was “particularly challenging” due to the complexity of the economic factors it was required to consider.
The FWC noted that CPI inflation had increased more than forecast and was now forecast to reach 4.8% according to the RBA, or 5% according to the Budget, by the end of the financial year.
The FWC also considers that modern award-reliant employees remain worse off in real terms than they were in July 2021, with the increased cost of essential goods and services continuing to place particular pressure on low-paid employees.
Although the FWC considered the increase necessary to address inflation and cost-of-living pressures, many employers will be concerned about the impact of a significant wage increase at a time when businesses continue to face rising input costs, higher interest rates and softening discretionary spending.
Other Announcements
The FWC also announced changes to the lowest classifications in modern awards.
The FWC has decided to phase out C13 classifications over three years, with the first stage to be implemented as part of this year’s Annual Wage Review.
As part of this change, C13 rates will increase by an additional amount above the general 4.75% increase. The C14 rate will also increase by the same percentage amount as the C13 rate to maintain its relativity.
This means that the lowest modern award rate applicable to ongoing employment will be $1,004.90 per week or $26.44 per hour.
An C14 entry-level rate that applies for no more than the first six months of employment must be at least $978.10 per week or $25.74 per hour.
What Should You Do Now?
Ahead of 1 July 2026, employers should carefully review their wage arrangements and implement the necessary wage and superannuation increases.
Employers should also review any employees covered by C13, C14 or equivalent entry-level classifications to ensure that the correct rates are applied from the first full pay period on or after 1 July 2026.
Please contact HR Legal if you have any questions regarding your minimum pay obligations.
