The decision is in.

Here Is What It Means for Your Business.

A few weeks ago, the Fair Work Commission handed down the Annual Wage Review 2026 decision. We’re breaking down what’s changed, what this means in practice, and what you need to do before 1 July.

What the Minimum Wage Increase
Means for Your Business

The real impact on your payroll, culture and workforce strategy.

4.75%

Modern award increase
from 1 July 2026

$26.44/hr

New National Minimum Wage $1,004.90 per week

~100,000

Lowest-paid workers receiving
an additional uplift

What Was Decided on 2 June 2026

Modern award minimum wages increase by 4.75% from 1 July 2026
National Minimum Wage rises to $26.44/hr or $1,004.90/week
Employees at C13 and C14 classification levels receive an extra 1.2% on top of the 4.75%, resulting in an approximate 5.95% increase
New minimum entry-level rate (C14): $978.10/week or $25.74/hr
Takes effect from the first full pay period on or after 1 July 2026
Directly affects around 2.8 million workers across Australia

The Decision

The 4.75% outcome is higher than the last two years (3.75% in 2024 and 3.5% in 2025) and above what most economists were expecting. It sits above the underlying inflation rate of 3.3% but below the headline CPI of 4.2% for April 2026.

The Commission acknowledged that this increase does not fully restore the real value of wages lost by award-covered workers since 2021. The stated aim was to ensure those workers are at least no worse off in real terms than they were on 1 July 2025. Given the current inflationary environment, the Commission determined that awarding a full real wage increase was not responsible in the circumstances.

For most businesses with award-covered staff, 4.75% is the number to work with. For some employees, however, the actual increase is higher. That is covered in the next section.

A Closer Look: C13 and C14 Rates

Alongside the general 4.75% increase, the Commission has begun phasing out the C13 classification rate, which is currently the lowest rate for employees in ongoing roles across the modern award system. The objective is to make C12 the new minimum floor over three Annual Wage Reviews. The first stage takes effect on 1 July 2026.

Employees at the C13 or C14 level receive an additional 1.2% on top of the standard increase, bringing their total to approximately 5.95%. Around 100,000 of Australia's lowest-paid workers are directly affected by this structural adjustment.

C13 Rate (Ongoing Employment)

From 1 July 2026, the minimum rate for any employee in an ongoing role across all modern awards is $1,004.90/week or $26.44/hr. If you have employees sitting at or near the old C13 rate, they need to be moved to this new model, not just receive the flat 4.75%.

C14 Rate (Entry-Level, Max 6 Months)

C14 is an entry-level rate that can only apply for the first six months of employment. It increases to $978.10/week or $25.74/hr from 1 July. After six months, employees must move to at least $26.44/hr. Using C14 beyond six months is not compliant.

Which businesses need to pay attention to this?

If you employ staff under the Hospitality Award, Restaurant Award, Children's Services Award, Vehicle Award, Horticulture Award or Pastoral Award, you may have employees at C13 or C14 level. Simply applying a flat 4.75% increase and moving on is not enough. You need to check each classification individually before your first July pay run.

What to Do Before 1 July

Here is what needs to happen before your first pay run after 1 July.

Confirm which award applies to each employee and check their classification level.
Identify any employees at C13 or C14 level. They are entitled to approximately 5.95%, not the flat 4.75%.
Review annualised salary arrangements. Confirm they still cover all award entitlements, including penalties and loadings, at the new rates (this is called a BOOT - better off overall test)
Check whether any above-award employees are now sitting too close to the new minimum. Compression between award-rate and above-award employees is a retention issue worth addressing now rather than later.
Confirm your payroll provider will apply the updated rates in time and check your first post-July pay run carefully, particularly casual loadings, penalty rates and allowances.
Tell your team. Employees on award rates will be expecting to hear from you. A short, clear update from their manager goes a long way.
Update any employment contracts or variations that reference specific dollar figures that which become below the new minimums.
Factor the increased wage bill into your next WorkCover wages declaration. Do not roll over last year's figures without adjusting for the new rates.

Do not forget: the real cost is higher than the headline

Superannuation at 12% is calculated on ordinary time earnings, so a 4.75% wage increase flows straight through to your super bill. Workers' compensation premiums are also typically based on total remuneration. The actual cost impact on your business is higher than 4.75% once you factor these in. Build that into your budgets now.

A reminder on gender undervaluation increases

The staged gender undervaluation increases we covered in Part One are still running separately to this decision. If your workforce includes roles under the Children's Services, SCHADS, Pharmacy, or Health Professionals Awards, those additional increases apply on their own timetable and are not captured in the 4.75% figure. Check both.

Need a Copy of the Manager Quick Guide from the May Newsletter?

All five steps in that guide apply directly to this decision. Work through them using 4.75% as your base rate, and apply 5.95% for any employees at C13 or C14 level.

View May Newsletter

The full Annual Wage Review 2026 decision is available at fwc.gov.au.