Fair Work Commission lifts minimum and award wages: what the 2026 decision means for employers

On 2 June 2026, the Fair Work Commission’s (FWC) Expert Panel handed down its decision in the 2026 Annual Wage Review. From the first full pay period starting on or after 1 July 2026, minimum wages under modern awards will rise by 4.75%, and the National Minimum Wage will increase to $26.44 per hour, or $1,004.90 per week, up from $24.95 per hour ($948.00 per week). That equates to a rise of roughly 5.97% in the National Minimum Wage, which now sits at the same level as the lowest ongoing modern award rate and, for the first time, exceeds $1,000 per week. For a full-time employee on the National Minimum Wage working a 38-hour week, the change is worth an extra $56.90 per week, or $1.49 per hour. It also comfortably outpaces the 3.5% awarded in the 2025 review.

In reaching its decision, the Expert Panel weighed a range of economic and social factors, including:

• sustained cost-of-living pressure on Australia’s lowest-paid workers and the real wage gap that has widened since the post-pandemic surge in inflation;

• inflation that ran higher than forecast, compounded by the uncertainty flowing from the conflict in the Middle East, which the Panel described as a “wild card” for the economic outlook;

• the Reserve Bank of Australia’s tighter monetary policy and the drag it is expected to place on economic activity;

• broader conditions across the national economy, including productivity, employment and business competitiveness; and

• the goal of narrowing the gender pay gap, the Panel observing that award-reliant employees are disproportionately women, are often engaged on a part-time or casual basis, and are concentrated in sectors that have historically been subject to gender-based undervaluation.

Who is affected

The 4.75% award adjustment will flow to a sizeable share of the workforce. The Commission estimated that around 21.1% of Australian employees, close to 2.7 million people, are paid at modern award rates and stand to benefit. By contrast, only a very small proportion of workers are paid the National Minimum Wage itself, so the Commission considered that the National Minimum Wage adjustment would have no discernible effect on the wider economy. The greatest impact is likely to be felt in award-reliant sectors such as accommodation and food services.

Not a “real” pay rise for most

Although the headline figures are positive, the 4.75% increase sits just below headline inflation. With the Reserve Bank forecasting headline inflation of about 4.8% for the year to June 2026, the Commission accepted that the rise would not amount to a genuine real wage increase for most award-reliant and minimum-wage employees. Its stated aim was the more modest one of ensuring those workers are no worse off in real terms than they were on 1 July 2025. The Commission found that fully closing the real wage gap, which has widened over recent years, was neither practicable nor responsible in the present economic climate.

A larger increase for the lowest-paid

The decision delivers more for employees at the very bottom of the award structure. The Commission has begun phasing out the C13 classification, long the lowest rate for ongoing award employment, so that the higher C12 rate will become the new floor over the next three annual reviews. As the first step, the C13 rate receives an additional increase of about 1.2% on top of the general 4.75%, taking its total rise to roughly 5.95%. The C14 entry-level rate, which applies for up to the first six months of employment, receives the same uplift to preserve its relativity, setting an entry-level floor of $25.74 per hour, or $978.10 per week.

What are your next steps as an employer?

• Check classifications and rates. Confirm each employee’s classification and pay rate against the new award and National Minimum Wage figures. The increases apply from the first full pay period starting on or after 1 July 2026, not necessarily 1 July itself.

• Update payroll before the first July run. Enter the new rates in your payroll system and check that allowances, penalties, overtime and the 25% casual loading are all calculated on the correct base rate.

• Review annualised salaries and set-off arrangements. Where staff are paid an all-inclusive or annualised salary, confirm it still fully absorbs their award entitlements after the increase; if it no longer does, the arrangement may need to be adjusted.

• Check enterprise agreements. Ensure base rates under any enterprise agreement remain at or above the relevant modern award rate, and at or above the National Minimum Wage for award-free employees.

• Watch the high-income threshold. The high-income threshold also rises on 1 July 2026, which can affect award coverage and any guarantee of annual earnings for higher-paid staff.

• Communicate in writing. Tell affected employees about the change in writing. Given the publicity the decision has attracted, clear and early communication is good practice.

This article is general information only, current as at the date of publication, and is not legal advice. You should obtain advice tailored to your circumstances before acting on the matters discussed.