From the first full pay period after 1 July 2026 there will be a 4.75% increase to Award rates.

Furthermore, the National Minimum Wage will be increased to $1,004.90 per week (a 5.97% increase) and the lowest paid classifications in modern Awards, the C13 and C14 wage rates will be phased out in three stages. This means that:

(a) The National Minimum Wage will increase from $24.95 per hour to $26.44 per hour ($1,004.90 per week) for full time employees;
(b) The C13 rates will be increased by 1/3rd of the difference between the C13 and C12 rate (to the new National Minimum Wage), and the C14 rate will be increased proportionally.

This decision sets a rate that is somewhere between the rates proposed by employer business groups and unions, which ranged from around 3.5% to 6%.

Rationale for decision

The Commission contends that the real value of award wages remains lower than July 2021 due to the post-pandemic inflation spike, creating a ‘real wage gap’ between CPI and modern award wage rates. According to the Commission, inflation for the year to June 2026 is forecasted (by the RBA) at 4.8%, and it would require an increase well in excess of 5% to ‘close the gap’.

It indicated that, taking into account the complex economic situation, it would not be ‘practicable or responsible in the current uncertain circumstances to award a real wage increase’. Instead, the Award rate increase is designed to ensure that award-reliant employees are generally not worse off in real terms as compared to 1 July 2025.

Your next steps

We strongly encourage you to check the minimum rates in any award applicable to your business, and, where the minimum rate is being paid to your employees, ensure that the increase is passed on from the first full pay period after 1 July 2026 to avoid the risk of under paying your employees. By way of a practical example, this means that if your pay period begins on a Wednesday, the increase must be passed on from 1 July 2026, while if it begins on a Thursday, the increase must be passed on from 2 July 2026.

It is also essential that you review pay rates for employees currently receiving over award payments (including salaries or above award flat rates), or who are engaged under enterprise agreements, to ensure that they are not underpaid when compared to the revised National Minimum Wage or relevant award rates. Please ensure that you remember to take into account increases to overtime rates, allowances, and penalty rates when assessing whether an above award rate is sufficient to cover relevant award entitlements.

If you have any questions or concerns about this review process, minimum wage increases, review of pay rates or any other workplace issues, please do not hesitate to reach out to our experienced Employment Law team.