From the first full pay period after 1 July 2025 there will be a 3.5% increase to the National Minimum Wage and the minimum rates in modern awards. This means that:

• The minimum wage will increase from $24.10 per hour to $24.95 per hour for full time employees; and
• All modern award rates will increase proportionately.

This decision sets a rate that is somewhere between the rates proposed by employer business groups and unions, which ranged from around 2.5% to 4.5%.

The minimum superannuation rate will also increase to 12% on 1 July 2025.

Rationale for decision

The Commission contends that the real value of modern award wages has declined by 4.5% since July 2021 due to a spike in inflation between 2021 and late 2022. According to the Commission, it has deferred taking action to reverse this decline previously out of concern that such action could result in further inflation. Now that the RBA has made an assessment that inflation has returned to its sustainable target range of 2-3 per cent, the Commission wishes to use this opportunity to ‘correct’ the decrease.

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 2025 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 Tuesday, the increase must be passed on from 1 July 2025, while if it begins on a Wednesday, the increase must be passed on from 2 July 2025.

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 or super increases, or any other workplace issues, please do not hesitate to reach out to our experienced Employment Law team.