The Fair Work Commission's 2026 Annual Wage Review has delivered a 4.75% increase to modern award minimum wages, effective from the first full pay period on or after 1 July 2026. The decision directly affects most Australian employers — from those paying at the award minimum to businesses with annualised salary arrangements or enterprise agreements. This article covers the new rates, who needs to act, and what to update before the change takes effect.

The new rates at a glance

Handed down on 2 June 2026, the decision awards a 4.75% increase to all modern award minimum wages and an approximately 6% increase to the National Minimum Wage — both effective from the first full pay period on or after 1 July 2026.

Important — "first full pay period" means it may not start on 1 July itself. If your pay cycle runs Monday to Sunday, and 1 July falls on a Wednesday, the new rates apply from the following Monday. The date your employees first receive the increase depends on when your pay period begins. Check your pay cycle and confirm the exact start date with your payroll system or adviser.

What to check — and what to update

Most Australian employers will need to act. Here's what to review based on how your employees are engaged.

1. Award-covered employees

Minimum pay rates under all modern awards increase by 4.75% from the first full pay period on or after 1 July 2026 — regardless of whether you currently pay at the minimum or above it.

Action: Update your payroll system with the new rates before the change takes effect. Confirm that allowances, overtime, penalty rates, and the casual loading are all calculated on the correct new base. Use the Fair Work Ombudsman's Pay Calculator to confirm the new minimum for each employee's award classification.

2. Award and agreement-free employees

Employees not covered by a modern award or enterprise agreement are entitled to at least the National Minimum Wage — now $26.44 per hour or $1,004.90 per week.

Action: Confirm any employees on this basis are meeting the new minimum from the start of the relevant pay period.

3. Enterprise agreement employees

Enterprise agreement base rates cannot fall below the applicable modern award rate. Where an agreement ties increases to the Annual Wage Review, those provisions will also be triggered.

Action: Confirm that base rates remain at or above the applicable modern award rate from 1 July 2026, and apply any review-linked clauses in your agreement.

4. Annualised salary and all-inclusive arrangements

Employees on annualised or all-inclusive salaries must still receive the equivalent of all award entitlements, including penalty rates, overtime, and allowances. A wage increase can affect whether existing arrangements continue to meet this requirement.

Action: Review your arrangements to confirm they still absorb all entitlements in full after the increase. If you're unsure, speak with a workplace relations adviser before the change takes effect.

Also review your labour cost projections. A 4.75% increase in minimum wages flows through to superannuation, payroll tax, and workers' compensation premiums where these are calculated as a percentage of wages. Update your budget forecasts to reflect the full impact across your workforce before the new financial year begins.

The 2026 wage increase is one of the more significant in recent years. Getting your payroll updated and your arrangements reviewed before the change takes effect is the most important step — and the Fair Work Ombudsman's resources below are the best starting point for confirming the rates that apply to your business. For complex arrangements, speak with a workplace relations specialist.

Official sources:

• Fair Work Ombudsman — Annual Wage Review 2026

• Fair Work Ombudsman — Pay Calculator

• Fair Work Commission — Annual Wage Review 2026

Last updated: June 2026