Australia's modern awards and national minimum wage to increase from 1 July

At a glance

• The Fair Work Commission’s (FWC) annual wage review expert panel has handed down its annual wage review decision.
• It announced a 4.75% rise in all minimum award rates and an approximate 6% rise in the national minimum wage (NMW).
• Increases will take effect from the first full pay period after 1 July 2026.

The FWC's annual wage review expert panel has announced an increase to modern award minimum wages by 4.75% and an increase to the NMW by approximately 6%. 

Under the Fair Work Act 2009, the FWC is required to conduct an annual review of the minimum wage rate for modern awards and the national minimum wage.

The award rate increase is indicated to impact 21.1% of the workforce (or 2.8 million people) who are paid at minimum award rates under a modern award. 

The NMW increase applies only to those employees within the national system not covered by a modern award or enterprise agreement. Its practical impact is therefore limited, affecting a relatively small cohort of the workforce (roughly 100,000 employees across Australia).

Factors considered when determining the increase include the performance and competitiveness of the national economy, the need to promote gender equality, the need to promote social inclusion through increased workforce participation, relative living standards and the needs of lower paid workers.

The FWC's decision noted challenges impacting this year’s wage review being the increased rate of inflation above the Reserve Bank of Australia's target band, the Middle East conflict and global fuel supply disruptions. These factors have created near term economic uncertainty, leading the FWC to conclude that it would not be 'practicable or reasonable in the current circumstances to award a real wage increase' sufficient to close the real wage gap, resulting in the below inflation increase.

The increases will take effect from the first full pay period on or after 1 July 2026.

Takeaways

Employers should take this opportunity to review current wages for all employees covered by modern awards to ensure minimum hourly rates (and salaries) create a sufficient buffer to account for all entitlements owed to employees under the relevant modern award.

If employers have any concerns regarding the implications of the rate increases on their workforce, please contact a member of the DLA Piper Employment team.