Quick Summary
Quick Summary
- Modern award minimum wage rates increased 4.75% from 1 July 2026 by Fair Work Commission decision
- The increase applies to every award classification; calculate each role’s new minimum by multiplying the old rate by 1.0475
- Underpayment after 1 July breaches the Fair Work Act 2009 and opens you to claims and audits; update payroll immediately and back-pay if needed
On 1 July 2026, every modern award in Australia received a 4.75% wage increase—the largest bulk adjustment handed down by the Fair Work Commission in this financial year. If your business employs staff under any modern award (whether Retail, Manufacturing, Hospitality, or another industry), your payroll just shifted. Many employers are still catching up on exactly which rates apply to their teams, how to calculate the uplift correctly, and what happens if they miss the deadline retroactively.
This guide cuts through the complexity. We explain which employees are covered, how to find your award rates, calculate the new minimum pay, update your systems, and stay audit-ready.
What Changed on 1 July 2026?
The Fair Work Commission’s Annual Wage Review 2026 delivered a 4.75% increase to all minimum wage rates in modern awards. This is separate from—and in addition to—the National Minimum Wage increase to $1,004.90 per week ($26.44/hour). Here’s what matters for your business:
- Award-covered employees: Minimum wage rates in their modern award increased by 4.75% from the first full pay period commencing on or after 1 July 2026.
- National Minimum Wage employees: If an employee isn’t covered by a modern award, they earn the National Minimum Wage of $1,004.90/week (or $26.44/hour).
- Enterprise Agreement employees: If your staff are on an enterprise agreement, wage increases must not fall below modern award rates (the “no less favourable” test). You may need to review those agreements.
- Casual multipliers: Casual loading (typically 25% on top of the base rate) also increases with the award rate. Your casual staff’s minimum pay went up accordingly.
Which Modern Award Applies to Your Business?
Australia has over 120 modern awards, each covering specific industries and roles. The Fair Work Ombudsman maintains the full list and rates. Common awards include:
- Retail Award: Supermarket, department store, and general retail workers.
- Hospitality Industry Award: Cafes, bars, restaurants, hotels.
- Manufacturing and Associated Industries Award: Factory and production workers.
- Social, Community, Home Care and Disability Services Industry Award: Aged care, disability support, community services.
- Professional Employees Award: Accountants, engineers, IT specialists in certain contexts.
If you don’t know which award covers your business, search the Fair Work Commission awards database. Enter your industry or role, and you’ll find the correct award document (updated to reflect the 1 July 2026 rates).
How the New Rates Work
Let’s say your award base rate for a Level 1 employee was $650/week before 1 July. The new rate is: $650 × 1.0475 = $680.88/week. That’s the legal minimum you must pay from the first full pay period on or after 1 July. Every week below that breaches the Fair Work Act 2009 and exposes you to underpayment claims and penalties.
The rates vary by level, qualification, and role. A Level 3 supervisor might earn $750/week, now $786.38. An apprentice might be on $350/week, now $366.63. The Fair Work Commission documents all rates in your award—download the updated award from the Fair Work Ombudsman website and check your staff’s classification against the new minimums.
Five Steps to Update Your Payroll
1. Identify Your Award-Covered Staff
List every employee and their award classification. Most payroll systems have an “Award” or “Classification” field—use it. If not, add it now; you’ll need it for audits.
2. Download the Updated Award
Visit the Fair Work Commission and download your award in PDF. The document will clearly mark the new rates effective 1 July 2026. Save a copy for your records—auditors will want to see you had the correct rates at hand.
3. Calculate New Minimums for Each Role
Use a simple spreadsheet or your payroll software’s built-in rate tool. Enter the old rate and multiply by 1.0475 to get the new minimum. Compare this to what you’re currently paying each employee. If anyone is being paid below the new minimum, adjust immediately (and check whether back pay is owed from 1 July).
4. Include Penalties, Allowances, and Casuals
The 4.75% increase applies to the base rate. But also check:
- Penalties for weekend/night work: These are usually calculated as a percentage on top of the base rate, so they rise too.
- Allowances (uniform, tools, meals): Check your award—some allowances rise with the base rate, others don’t.
- Casual loading: If you pay 25% casual loading, the total is 125% of the new base rate.
5. Test Your Payroll System
Run a test pay for one or two employees in each classification. Check the payslip: is the base rate correct, penalties updated, deductions clean, and net pay sensible? Then roll out to all staff.
📅 Action Required: 1 July 2026 Wage Increase Now Live
All modern award minimum wages increased 4.75% effective 1 July 2026. If your payroll hasn’t been updated, you’re underpaying and exposed to claims and penalties. Update immediately and check for back pay owed.
Key Takeaways
Key Takeaways for Employers
- ✓Identify all award-covered staff and download the updated modern award document for your industry
- ✓Recalculate base rates, penalties, allowances, and casual loadings using the 4.75% uplift
- ✓Test payroll changes before rolling out, and maintain records of the award and your compliance process
- ✓If you have an enterprise agreement, verify it meets (or exceeds) the new modern award minimums
- ✓Pay back pay for any periods from 1 July 2026 where you didn’t apply the new rate, and document the correction
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Backdating and Back Pay
If you missed updating payroll immediately on 1 July, you may owe back pay. The increase applied “from the first full pay period commencing on or after 1 July 2026.” That’s precise—if your first pay period after 1 July was 4 July to 17 July, the new rate applies to that week. Any week you didn’t apply the 4.75% increase (when you should have) creates underpayment exposure.
If you’re behind, calculate the shortfall now and pay it out on the next available pay run. Document that you’ve corrected the error (e.g., an email to staff, a bank record, a payroll memo). When the Fair Work Ombudsman or an auditor asks, you’ll have evidence of good faith correction.
Enterprise Agreements and Industrial Instruments
If your staff are on an enterprise agreement, the agreement must not contain minimum wages lower than the modern award rates. This is the “no less favourable” protection under the Fair Work Act 2009. If your agreement was negotiated with rates that are now below the updated modern award minimum, you must pay the modern award rate (the higher amount).
Many enterprise agreements also have “flow-on” clauses tied to the Annual Wage Review. If yours does, those flows are now effective. If yours doesn’t, you’ll need to decide whether to renegotiate or accept that the agreement stays as-is (but pays at least the modern award minimum).
Who Gets Audited?
The Fair Work Ombudsman conducts surprise payroll audits, especially after major wage changes. They look for:
- Payroll records that show incorrect rates post-1 July.
- Award documents and employee records with mismatched classifications.
- Missing or incomplete time and wages records.
- Back pay calculations that don’t reconcile to pay slips.
The best protection is to get ahead of it: correct your payroll now, keep copies of the award and your updated rates, and document your process. Fair Work compliance is not optional—and audits are not rare. Learn more about staying compliant in our guide on payroll compliance and record-keeping.
Free Resources and Support
The Fair Work Ombudsman offers free phone advice (13 13 94) and detailed guides on paying awards correctly. The Fair Work Commission website has all modern award documents. And if your business is considering employment law questions beyond payroll—like whether an employee is correctly classified, or how to handle a redundancy—Fair Work Centre can provide dedicated advice. Book a free 20-minute initial call to discuss your specific situation, or explore ongoing advice packages for peace of mind.
Final Checklist
Before you leave payroll on “set and forget”:
- ☐ Identified every award-covered employee and their classification.
- ☐ Downloaded the correct modern award and saved it.
- ☐ Calculated new minimums for each role (base rate × 1.0475).
- ☐ Updated your payroll system with new rates.
- ☐ Checked penalties, allowances, and casual rates are consistent with the award.
- ☐ Ran a test pay and verified it’s correct.
- ☐ Calculated and paid any back pay owed from 1 July.
- ☐ If on an enterprise agreement, reviewed it against new modern award minimums.
- ☐ Kept a copy of the award and your payroll records for audit trails.
The 4.75% increase is significant, and missing it exposes your business to underpayment claims, penalties, and reputational damage. But with a systematic approach—identify, calculate, update, check, document—you’ll stay compliant and keep your team paid fairly.
Frequently Asked Questions
The Fair Work Commission approved a 4.75% increase to all minimum wage rates in modern awards, effective from the first full pay period commencing on or after 1 July 2026. This applies to every modern award in Australia, across all industries.
Take the employee’s previous award minimum rate and multiply by 1.0475. For example, if they were earning $600/week, the new minimum is $600 × 1.0475 = $628.50/week. This applies to their base rate; penalties and loadings are calculated on top.
You are underpaying, which breaches the Fair Work Act 2009. Employees can lodge underpayment claims with the Fair Work Ombudsman, and your business faces penalties. Calculate back pay immediately and adjust payroll. Fair Work audits often follow major wage changes.
Yes. If a casual’s base rate was $600/week, their new minimum is $628.50/week. If you pay 25% casual loading, the total is $628.50 × 1.25 = $785.63/week. Casual rates rise with the award minimum.
Enterprise agreements must offer minimum wages no less favourable than the modern award rate. If your agreement has rates now below the updated modern award, you must pay the modern award rate (the higher amount). Some agreements have flow-on clauses that adjust automatically.
Search the Fair Work Commission awards database (www.fwc.gov.au/awards-and-agreements) by industry or role. If you employ retail staff, you’ll need the Retail Award; hospitality staff need the Hospitality Industry Award, and so on. The award determines minimum rates for each classification.
The Fair Work Act specifies ‘the first full pay period commencing on or after 1 July 2026.’ If your first pay period after 1 July starts on 4 July, the new rates apply to that week. If a pay period starts before 1 July and ends after, the old rate applies to that entire period (not a split calculation).
From 1 July 2026, the National Minimum Wage is $1,004.90 per week, or $26.44 per hour. This applies to employees not covered by a modern award. It is separate from and in addition to the 4.75% modern award increase.
Yes. The Fair Work Ombudsman conducts surprise payroll audits, especially after major wage changes. They check award classifications, payroll records, time-and-wages documentation, and back pay calculations. Having clear records, the correct award, and documented compliance is your best defense.
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