2026 Annual Wage Review: What it means for Australian employers

On 2 June 2026, the Fair Work Commission handed down its annual wage review decision. Here’s what changed, who it affects, and what Australian employers need to sort out before the new rates take effect.

We’ve written it to apply across every industry, so some parts will matter more to your business than others depending on the award (or awards) that cover your team.

What’s changing under the 2026 Annual Wage Review

From the first full pay period on or after 1 July 2026:

Modern award minimum wage rates increase by 4.75%.
Wage rates for the lowest-paid classifications in modern awards: C13 and C14, increase by an extra 1.2% on top of the general 4.75% rise.
The national minimum wage increases to $1,004.90 per week (or $26.44 per hour) - a rise of around 6%.

Who do the 1 July minimum wage changes apply to?

The national minimum wage only applies to workers who are not covered by a modern award or enterprise agreement, which is a small percentage of Australia’s working population. For most businesses, it’s the 4.75% increase to award minimum wage rates that has the most effect, as it applies to almost 2.8 million people (or approximately 21% of Australian employees).

So, from 1 July 2026:

If your people are covered by a modern award, the 4.75% increase applies to the award minimum rates for their classifications.
If you have employees who are award- or agreement-free, the new national minimum wage is the minimum rate that you must pay them.
If your business runs an enterprise agreement, the increase to award minimum wage rates can still be relevant, because the base rate in an agreement can’t sit below the base rate in the underpinning award. Where an agreement rate would fall short of the new award minimum, the higher award rate applies.

For anyone already paid above the award minimum, the increase doesn’t affect their actual pay but you still need to be sure that above-award salaries, annualised arrangements, and set-off clauses continue to sit above the new minimums once the 4.75% flows through - that includes any allowances, loadings, and penalties built into the award.

If you want more detail of the annual wage review, visit the Fair Work Commission's website.

A change to the lowest-paid award classifications

Alongside the general increase, the Fair Work Commission has started restructuring the lowest-paid award classifications, known as the C13 and C14 rates. This is most likely to matter if you engage staff right at the bottom of your award’s classification structure, which is more common in manufacturing, trades, and entry-level roles.

The C13 rate is being phased out over 3 stages so that the next level up: C12, eventually becomes the lowest rate for ongoing employment. In the first stage (applicable from 1 July 2026), the C13 rate gets an extra 1.2% on top of the general 4.75% increase, rising to $1004.90 per week or $26.44 per hour.

The C14 entry-level rate, which can only apply for an initial period of employment up to 6 months, gets the same percentage uplift to keep it relative. The new C14 wage is $978.10 per week, or $25.74 per hour.

If you have anyone sitting on or near these lowest classifications, it’s worth flagging them now so you don’t miss these extra adjustments.

The timing and factoring in correct rates

The wage increases apply from the first full pay period that starts on or after 1 July 2026. That’s not necessarily 1 July itself.

If your pay period straddles that date, the new rates apply from the start of the next full pay period, not partway through the current one. A pay period that began before 1 July simply runs to its end at the old rates.

One practical wrinkle is that updated award rates often aren’t published until very close to 1 July, and sometimes a few days after. However, the effective date is locked in by the annual wage review decision, so you are obliged to pay the new rates from that first full pay period on or after 1 July 2026.

If the exact figures for your award aren’t published until after that first pay period has begun, you will need to check you have applied the increase correctly. If there is any shortfall in what you paid employees, you will need to top up their wages to the correct amount.

Find award pay rates using the Fair Work Ombudsman’s pay calculator.

What Australian employers need to do right now to prepare for wage increases

Identify which award (or awards) cover your team, and which classifications your people sit in.
Note anyone paid above the award minimum and check their pay still clears the new minimums once the increase flows through, including any annualised salary or set-off arrangements.
Flag anyone on or near the lowest classifications for the additional C13 and C14 adjustment.
Brief whoever runs your payroll on the first-full-pay-period timing, so the increase applies from the right date rather than defaulting to 1 July. Also check your payroll covers the increase correctly in the event you don’t get updated award rates before the pay run starts.
Review any contracts, letters, or policies that reference minimum rates so they stay accurate.

Flow-on effects

Because so many entitlements are calculated off the base rate, the increase also flows through to things like overtime, penalty rates, leave loading, and superannuation contributions, as well as any allowances expressed as a percentage of the minimum wage.

Keep this in mind when you budget for the new financial year, as the base rate percentage understates the full cost of the increases once these flow-on amounts are included.

How MyHR can help you stay on the right side of Australian employment law

If anything we’ve covered here raises a question about your team, your award, or your next pay run, get in touch with MyHR. Our local team of Australian employment experts is here to answer any question about pay rates, employee remuneration, or award coverage, as well as any help you may need handling tricky situations or to manage risk and liability to your business.