National Minimum Wage 2026: Employer Compliance Guide & Award Rates

National minimum wage rates changed on 1 July 2026, and if you’re still paying your team based on last year’s figures, you’re out of compliance. This isn’t optional. The Fair Work Act requires employers to pay at least the current National Minimum Wage, and breaching this can trigger claims, penalties, and regulatory action from the Fair Work Ombudsman.

Here’s what changed and what you need to do right now.

What Changed on 1 July 2026

From 1 July 2026, the National Minimum Wage increased to $1,004.90 per week, or $26.44 per hour. This represents a 4.75% increase from the previous rate of $959.60 per week.

If your business employs award-free workers (employees not covered by a modern award), your payroll must reflect this new floor immediately. This applies to all full-time, part-time, and casual employees.

Additionally, all Modern Award minimum wages increased by 4.75% at the same time. So if your team works under an award—retail, hospitality, manufacturing, healthcare, aged care, construction, or any other award-covered role—their minimum rates have also increased. You need to check your specific award rates on the Fair Work Ombudsman website and update your payroll accordingly.

Why This Matters for Employers

The National Minimum Wage is a legal floor, not a recommendation. Paying below this rate is a breach of the National Employment Standards (NES) under the Fair Work Act 2009.

Here’s what happens if you don’t comply:

1. Fair Work Ombudsman investigations – If an employee complains or if the Ombudsman identifies underpayment through a workplace visit or audit, they can issue compliance notices and pursue penalties.
2. Back-pay claims – Employees can lodge underpayment claims, and you’ll be liable for every week or month of wages below the legal minimum, plus interest.
3. Federal Court penalties – Repeated or deliberate contraventions can result in civil penalties. For individuals (director-level), penalties can exceed $50,000. For corporations, they can reach $262,000 or more.
4. Reputational damage – Wage theft is a public issue in Australia. Non-compliance can damage your brand, affect recruitment, and trigger media attention.

How to Audit Your Payroll Now

Step 1: Identify all award-free employees. These are staff not covered by a published modern award. Their minimum wage is $1,004.90 per week ($26.44 per hour) as of 1 July 2026.

Step 2: Check your award. If your employees are covered by a modern award (e.g., Retail, Hospitality, Manufacturing, Aged Care), download the current award from the Fair Work Ombudsman and confirm the new minimum rates effective from 1 July 2026. Award rates vary by classification level, so check which classification each employee falls under.

Step 3: Review your payroll. Cross-check every employee’s weekly or hourly rate against the 1 July 2026 minimum. Include all ordinary time earnings, but exclude allowances, bonuses, and other entitlements that don’t count toward the minimum wage.

Step 4: Calculate any underpayment. If you’ve underpaid anyone between 1 July 2026 and now, calculate the shortfall on an ongoing basis (weekly rates for salaried staff, or hourly totals for casual/part-time workers).

Step 5: Correct the payroll. Update pay rates effective immediately. If underpayment has occurred, arrange repayment.

Step 6: Document your audit. Keep a record of when you checked, what you found, and what corrections you made. This demonstrates good-faith compliance if the Fair Work Ombudsman asks.

Special Considerations

Casual employees: Casual workers must receive at least the National Minimum Wage for each hour worked. Many employers underpay casuals by not accounting for the full hourly rate correctly. A casual on $26.44/hour should receive exactly that (or the award rate if award-covered), plus any applicable casual loading (typically 20–25%).

Award-covered employees: Modern awards specify minimum rates by classification. A Level 1 retail assistant earns differently from a Level 3. If you’re unsure which classification applies, the award itself defines job roles and responsibilities. Misclassification is a common error.

Salaried employees: If you pay a salary, you must ensure it equates to at least the National Minimum Wage for a 38-hour week, plus any penalty rates or loadings required by the award or your agreement. A common mistake is paying a fixed salary without adjusting for wage rises.

Agreement-based pay: If an employee is covered by a registered enterprise agreement (EA) or other agreement, that agreement sets the minimum rate—but it must be at least the award rate or NES rate, whichever is higher. The 4.75% increase doesn’t automatically apply to EAs; your agreement’s terms control.

Employees Under Threshold Agreements

Some employees (especially in professional roles) may have threshold agreements allowing flexible pay structures. However, the National Minimum Wage still applies as a floor. Even if an employee is on a threshold agreement, their ordinary time earnings cannot fall below $1,004.90 per week.

What If You’ve Underpaid?

If your audit reveals underpayment:

1. Calculate the debt accurately. Work out every week or pay period where the rate fell short.
2. Pay it back. Arrange full repayment to the employee as soon as possible. This isn’t a tax deduction for you—it’s money owed.
3. Notify the employee. Write to the employee explaining the error, the amount owed, and when they’ll receive it.
4. Update payroll going forward. Fix the rate and document the change.
5. Consider disclosure. If the underpayment is significant, you may consider a voluntary disclosure to the Fair Work Ombudsman. While this doesn’t eliminate liability, it can reduce penalties and demonstrates good faith.

Don’t ignore underpayment hoping no one notices. Fair Work Ombudsman compliance campaigns are active, and employee complaints are rising. The cost of fixing it yourself is far less than the cost of litigation or penalties.

Key Takeaways for Your Business

• National Minimum Wage: $1,004.90/week ($26.44/hour) from 1 July 2026.
• Modern Award rates: all rates increased 4.75% from 1 July 2026. Check your specific award.
• Non-compliance: breaches the Fair Work Act and can result in back-pay claims, Fair Work Ombudsman investigation, and penalties up to $262,000+ for corporations.
• Action: audit all employee rates this week, confirm against the latest award or NES, and correct any underpayment immediately.
• Casual loading: casuals must receive the minimum wage (or award rate) plus applicable loading (typically 20–25%).

Common Questions from Employers

Learn more about the latest payroll compliance requirements and modern awards obligations on Fair Work Centre.