4.75% Wage Increase: What Every Australian Business Needs to Do Before 1 July

The Fair Work Commission handed down its Annual Wage Review decision this morning. Modern award wage rates rise 4.75% from 1 July 2026.

For context, the RBA is forecasting headline inflation of 4.8% for the year to June 2026. The Commission was clear it could not fully close the real wage gap in the current climate, so this increase is designed to keep award-reliant workers no worse off in real terms than they were on 1 July 2025.

That is a deliberate, nuanced decision. It is not a catch-up. It is a hold-the-line. But for businesses, the practical effect is the same: payroll costs are going up in less than a month, and you need to be ready.

The numbers you need to know

From the first full pay period on or after 1 July 2026:

• The National Minimum Wage rises to $1,004.90 per week ($26.44 per hour)
• All modern award minimum wage rates increase by 4.75%
• Junior, apprentice, and trainee rates move proportionally
• Any enterprise agreement benchmarked against the award is also affected

For most weekly-paid employees the change kicks in from 7 July. For fortnightly pay cycles, it depends on when your cycle starts. Check your payroll system and confirm the correct date before the end of June.

The classification change affecting around 100,000 workers

This year’s decision includes a structural change to the lowest-paid classifications in the modern award system, and it affects around 100,000 of Australia’s lowest-paid employees.

Here is what is happening. The C13 classification is being phased out over three stages, with C12 becoming the new floor for ongoing employment. Stage one starts now.

As part of that transition:

• C13 receives an additional bump of one-third of the gap between C13 and C12
• C14 rises proportionally
• The new entry-level rate (capped at six months for new starters only) is $978.10 per week ($25.74 per hour)

In plain English: if you have employees in entry-level classifications, their rate is not just going up by 4.75%. It may be going up by more, depending on where they sit in the classification structure. And if any employee has been on an entry-level rate for longer than six months, they should already be on C13 or above. If that has not happened, you have an underpayment risk.

The sectors most exposed to these classification changes are accommodation and food services, health care and social assistance, retail, and admin and support services. But any business with award-covered entry-level staff needs to check.

Have an enterprise agreement? Read this carefully.

Enterprise agreements do not automatically update when award rates change. But they still have to pass the Better Off Overall Test (BOOT), which compares what employees get under the agreement against what they would receive under the applicable modern award.

After 1 July, the award floor goes up 4.75% (plus, for some classifications, a little more). If your enterprise agreement rates have not kept pace, employees who were previously better off overall may no longer be. That is a compliance problem.

It does not matter if your agreement was approved three years ago and has been sitting quietly ever since. What matters is whether it passes the BOOT against the current award rates.

The safest move is to run a BOOT assessment against the new rates before 1 July. If there is a gap, there are ways to address it. But you need to find it first.

What to do before 30 June

• Confirm your payroll system will apply the new rates from the correct date
• Check every award-covered employee’s classification, including entry-level roles
• For any employee on a C13 or below rate, confirm they have not exceeded the six-month entry-level period
• If you have an enterprise agreement, run a BOOT comparison against the new award rates
• If above-award salaries are sitting close to the minimum, check they still clear all award components including penalties, allowances, and loadings

Wage theft has been a criminal offence since 1 January 2025. Underpaying award or minimum wage rates is not a paperwork problem, it is a legal risk. There is no grace period for not knowing.

Not sure if your arrangements stack up?

That is exactly what a BOOT test and payroll compliance review is for. We look at your current rates, your classifications, your award coverage, and your enterprise agreement (if you have one), and tell you clearly whether you are exposed and what to do about it.

Book a BOOT test and compliance review with the HR Gurus team. We will get you sorted before 1 July so you can start the new financial year on solid ground.

Book your review at hrgurus.com.au or get in touch with our team today.