Written by: Eloise Turnbull (Updated: 06/07/2026)
The Fair Work Commission has confirmed a 4.75% increase to minimum modern award wages, and a larger increase to the National Minimum Wage, both effective from the first full pay period starting on or after 1 July 2026. The new rates are already live for most businesses.
If you have not checked your payroll yet, now is the time. Getting this wrong, even unintentionally, can lead to back-pay liability and potential penalties from the Fair Work Ombudsman.
What are the new minimum wage rates for 2026?
From the first full pay period on or after 1 July 2026, the National Minimum Wage is $1,004.90 per week, or $26.44 per hour. This is the legal floor for any employee who is not covered by a modern award or enterprise agreement.
It is the first time the National Minimum Wage has sat above $1,000 per week, and it represents an increase of close to 6%, not 4.75%. The two figures are different and it is worth being clear about which applies, because applying 4.75% to the old National Minimum Wage produces a figure below the new floor and will underpay an award-free employee.
Separately, minimum wages under modern awards increased by 4.75% across the board.
As a result:
- The lowest rate in any modern award for ongoing employment is now at least $1,004.90 per week, or $26.44 per hour; and
- The entry-level rate that applies for no more than the first six months of employment is at least $978.10 per week, or $25.74 per hour.
One important qualification: the increase was not a flat 4.75% for everyone. The Commission applied a structural adjustment to the lowest-paid classifications and is phasing out the C13 rate, so employees at the very lowest classification levels received more than 4.75%. If you have staff at or near the bottom of an award classification structure, do not assume a flat 4.75% is correct for them. Confirm the rate against the award.
Does the increase apply to your employees?
Most likely, yes. The 4.75% increase applies across modern awards generally, and every classification level moves, not just entry-level roles. Most employees are covered by a modern award, and their rates will be higher than the National Minimum Wage.
When do the new rates actually take effect?
This is the part that may catch employers off guard. The increase does not apply uniformly from 1 July. It applies from the first full pay period that starts on or after 1 July 2026.
In practice:
- A weekly pay cycle starting Monday 29 June means the new rates apply from Monday 6 July;
- A fortnightly cycle starting Wednesday 1 July means the new rates apply immediately; and
- A monthly cycle starting 15 June means the new rates apply from 15 July.
If your pay cycle straddles 1 July, you do not split the pay period. The old rate applies for that full cycle, and the new rate begins from the next one.
How do you calculate the new rates for your staff?
It is not simply a matter of applying a flat 4.75% to everyone. There are a few things to check.
- Identify the right modern award. Not every employee is award-free. Senior managers and some specialised professionals may be, but most roles fall under a modern award. Treating an employee as award-free when an award in fact applies is a common and costly error.
- Check each employee’s classification level. Award rates are tiered by duties, qualifications and experience, and the lowest classifications received more than 4.75% this year. Applying the increase to the wrong level can still leave you with an underpayment.
- Use the Fair Work Ombudsman’s Pay and Conditions Tool. The FWO’s online tools have been updated with the 2026 rates. Use them to confirm exact hourly rates, penalty rates and allowances for each role.
- Update your payroll system. Apply the new rates from the correct trigger date for your pay cycle and verify the first few payslips manually. Automated systems can introduce errors during rate transitions, so check the output rather than assuming it is correct.
While you’re updating payroll for the award increase, check your systems are also ready for the Payday Super reforms, which take effect also on 1 July and require separate compliance steps.
What about casual loading and penalty rates?
Casual loading and penalty rates are calculated as a percentage of the base rate, so when the base rate rises, these rise in dollar terms as well. The casual loading for award-free and agreement-free employees remains at 25%. To recalculate it, take the new base rate for the classification, multiply by 0.25 to get the loading, and add the two together for the total casual hourly rate.
Penalty rates for weekends, public holidays and overtime also scale with the base rate. A common payroll error is updating the base rate but leaving penalty rate calculations tied to the old figure. Check each one. Some awards also use all-purpose rates, where certain allowances are built into the rate before loadings are applied, which adds a further layer to the calculation. If your award works this way, have it checked.
What happens if you get it wrong?
The FWO actively audits wage compliance, and the consequences of underpayment can extend well beyond repaying the difference.
Civil penalties can be ordered in addition to the back-pay. Where an underpayment amounts to a serious contravention, broadly where it is knowing or reckless, the maximum penalties are substantially higher. Since 1 January 2025, intentionally underpaying employees has also been a criminal offence. Individuals, including directors and other officers, can be personally liable as accessories where they were knowingly involved in a contravention.
Record-keeping matters here too. Where an employer’s records are inadequate, the onus can shift to the employer to disprove an underpayment claim. Accurate rosters, payslips and a documented rationale for each classification are your best protection if a claim is made.
The most common mistakes to avoid
Most underpayment issues are not deliberate. They come from a handful of recurring errors:
- Treating an employee as award-free when a modern award applies;
- Applying the increase to the wrong classification level, or assuming a flat 4.75% for the lowest classifications when they in fact rose by more;
- Relying on the percentage rather than confirming the actual dollar floor for the role;
- Updating the base rate but not the associated penalty rate and loading calculations;
- Applying the increase mid-pay-period instead of from the correct trigger date; and
- Not reviewing annualised salary and all-inclusive salary arrangements to confirm they still cover the new minimums.
If you pay all-inclusive salaries or rely on set-off or offset clauses, those arrangements need to be tested against the updated rates. A salary that absorbed an employee’s award entitlements in 2025 may no longer do so in 2026. A proper compliance review looks not only at the headline rates but at whether your employment contracts, salary arrangements and workplace policies still do the job they were written to do.
Frequently asked questions
How much is the National Minimum Wage in 2026?
The National Minimum Wage is $1,004.90 per week, or $26.44 per hour, effective from the first full pay period starting on or after 1 July 2026.
Did the National Minimum Wage go up by 4.75%?
No. The 4.75% increase applies to modern award minimum wages. The National Minimum Wage rose by close to 6% to reach $1,004.90 per week. Use the dollar figure rather than the percentage when checking an award-free employee’s pay.
Does the increase apply to all modern awards?
Yes. The increase applies to modern award minimum wages generally, and every classification level must be updated, not just entry-level rates. The lowest classifications rose by more than 4.75%.
When did the 2026 minimum wage increase start?
From the first full pay period beginning on or after 1 July 2026. The exact date depends on your pay cycle.
Do I need to increase pay for employees already earning above the minimum?
Not necessarily, but you need to confirm their total remuneration still satisfies all minimum entitlements under their award, including overtime and penalties. If you use annualised salaries or offset arrangements, review them, because an arrangement that was compliant last year may not be now.
What if I am not sure which modern award applies to my staff?
This is worth getting right immediately, because misclassification is one of the most common sources of underpayment. Our Employment Law team can help you identify the correct award and classification for each role.
Not sure where your payroll stands?
If you are not confident your pay rates are fully compliant with the 2026 changes, it is worth getting advice early, before a small discrepancy becomes a back-pay claim. We can review your rates, classifications, annualised salary arrangements and the contracts and policies that sit behind them, so you know your position is sound rather than assuming it.
Contact our Employment Law team to arrange a wage compliance review.
Greenhalgh Pickard’s Employment Law Team
Disclaimer: This article provides general information only and does not constitute legal advice. It does not take into account your personal circumstances and should not be relied on as a substitute for professional legal advice. Strict time limits apply to employment claims under Australian law. For advice about your specific situation, please contact Greenhalgh Pickard on (07) 5444 1022.