The annual wage review decision was handed down this morning, with the Fair Work Commission deciding to increase the national minimum wage and award minimum wage rates by 4.75% from 1 July 2026.
About 21% of all Australian employees will benefit from the increase. These group of workers are predominantly female, work part-time or casual hours, and make up around 11% of Australia’s total ‘wage bill’. They are also concentrated in four main industries: accommodation and food services, retail trade, administrative and support services, and health care and social assistance services.
While the increase affects only one in five workers, the decision tends to set a benchmark for employees seeking pay rises across the workforce as a whole.
Rationale for the increase
The Commission observed that the wage rates of award-reliant workers continued to be worse off in real terms than they were in July 2021, before the post-pandemic inflation spike. The gap between the CPI and modern award wage rates continues to affect the living standards of low-paid workers. It also observed that this year’s decision was especially challenging due to the ‘unusual degree of complexity in the interaction of the matters we are required to take into account’.
The Commission used the RBA forecast CPI of ~4.8% for 2025–26 as a benchmark in its decision. Rather than providing an increase to restore real wage losses caused by recent inflation (which would have required well over 5%), the decision aimed to prevent a further decline in real wages and ensure that workers were not worse off than they were in July 2025. The Commission referred to cost pressures remaining a key economic risk for employers (inflation, fuel prices and interest rates), as well as ongoing economic uncertainty relating to the ‘wild card of the Middle East conflict’.
Structural Changes for C13/14 levels
In addition to the increase, the Commission has also confirmed a staged structural reform of C13 classifications, which are being phased out over time. This means the minimum ongoing rate will be the higher C12 level. The lowest paid employees will receive additional targeted increases this year as the first stage of that transition.
A copy of the decision summary is linked here.
Changes from 1 July 2026
- National Minimum Wage increases to $1,004.90 per week / $26.44 per hour
- Modern award minimum rates increase by 4.75%
- Entry-level (C14) rates will increase to at least $978.10 per week ($25.74 per hour)
To prepare for the changes, employers should:
- Update pay rates for the first full pay period on or after 1 July 2026
- Audit award classifications, particularly for:
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- employees at or near C13/14 levels; and
- employees on junior rates, noting the recent junior rate decision and staged increases throughout the year
For advice on how these changes may affect your organisation, please contact Coleman Greig’s Employment Law team.
