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- The national minimum wage will rise to AU$1004.90 per week, or AU$26.44 per hour.
- Additional adjustments to the C13 and C14 classifications mean the lowest ongoing modern award rate must be at least AU$1004.90 per week, while short-term entry-level rates must be at least AU$978.10 per week.
- The increase is intended to stop award-reliant workers from falling further behind, while acknowledging ongoing inflation, economic uncertainty and the impact on low-paid workers.
The Fair Work Commission has confirmed a 4.75% increase to Australia’s national minimum wage and modern award minimum wage rates, effective from 1 July 2026.
The decision will lift the national minimum wage to AU$1004.90 per week, or AU$26.44 per hour, based on a 38-hour week. The new rates will apply from the start of an employee’s first full pay period on or after 1 July 2026.
Modern award minimum wage rates will also increase by 4.75%, although the Commission has made additional changes for the lowest-paid classifications in the award system.
Extra support for lowest-paid award workers
The Commission has also made additional adjustments for the lowest-paid classifications in the award system.
Under the decision, the lowest modern award rate for ongoing employment must be at least AU$1004.90 per week, or AU$26.44 per hour. Entry-level rates that apply for no more than the first six months of employment must be at least AU$978.10 per week, or AU$25.74 per hour.
The Commission said the structural adjustment is aimed at protecting the lowest-paid award workers, particularly those classified at the C13 and C14 levels. It estimated the change would affect around 100,000 of the lowest-paid employees.
Who is affected by the annual wage review?
The Fair Work Commission is required to conduct an annual wage review each financial year under the Fair Work Act. The review has two main functions: setting the national minimum wage and deciding whether minimum wage rates in modern awards should be adjusted.
While the national minimum wage applies only to workers who are not covered by a modern award or enterprise agreement, modern award rates have a much broader impact. The Commission said around 21.1% of Australian employees, or almost 2.8mn people, are paid minimum rates under a modern award and are directly affected by annual wage review decisions.
These workers are concentrated in several sectors, meaning the wage review has a stronger impact on some industries than others. The Commission said accommodation and food services, health care and social assistance, retail trade, and administrative and support services account for more than two-thirds of all modern award-reliant employees.
Award-reliant employees are more likely than the broader workforce to be part-time, casual, female and low-paid. Migrant workers from non-main English-speaking countries and Indigenous Australians are also over-represented in this group.
In making its decision, the Commission must balance a range of factors under the Fair Work Act, including the state of the economy, business competitiveness, gender equality, workforce participation, living standards and the needs of low-paid workers. It also considered submissions from employer groups, unions and federal and state governments.
The Commission said the structural adjustment is aimed at protecting the lowest-paid award workers, particularly those classified at the C13 and C14 levels. It estimated the change would affect around 100,000 of the lowest-paid employees.
It added that the broader 4.75% increase will have the greatest practical impact on employees covered by modern awards.
Why the increase was set at 4.75%
In reaching its decision, the Commission said many employees who rely on modern award wages are still earning less in real terms than they were in July 2021, before the post-pandemic surge in inflation.
It said this "real wage gap" has placed particular pressure on low-paid workers, especially as the cost of essential goods and services has been rising faster than headline inflation.
While last year’s wage review helped narrow the gap, the Commission said higher-than-expected inflation had widened it again. The RBA has forecast inflation of 4.8% for the year to June 2026, meaning an increase of more than 5% would be needed to fully restore award wages in real terms.
However, the Commission said it would not be practical or responsible to grant an increase large enough to close the gap completely, given current economic uncertainty, including inflation pressures, slower growth linked to tighter monetary policy, and the impact of the Middle East conflict on oil prices.
Instead, it said, the 4.75% increase is designed to stop award-reliant employees from falling further behind, while additional adjustments to the lowest award classifications are intended to provide extra support for the lowest-paid workers.
Other wage arrangements confirmed
The national minimum wage order will also retain a 25% casual loading for award/agreement-free employees. Special arrangements will continue for award/agreement-free employees with disability, junior employees, apprentices and employees to whom training arrangements apply.
Trainee and apprentice wage rates in modern awards that are not expressed as a percentage of another classification rate will also increase by 4.75%.
The Commission also confirmed that wage rates in remaining transitional instruments and copied State awards will rise by 4.75%, taking effect from the first full pay period on or after 1 July 2026.
It also considered other factors required under the Fair Work Act, including the need to support flexible and productive work practices, ensure additional pay for overtime, weekend, public holiday, shift or irregular work, and maintain a simple and sustainable modern award system. However, aside from the changes to the lowest award classifications, the Commission said these matters did not play a significant role in this year’s minimum wage decision.
Speaking on the decision, Sally McManus, Secretary, Australian Council of Trade Unions said the union welcomes the Fair Work Commission's decision to lift wages by 4.75%.
"It means relief is on the way for lower paid workers to help keep up with price pressures and avoid the need to cut back on essentials like food or seeing a doctor."
"It is encouraging to see that even higher wage rises of 6%, matching our full claim, have been awarded to around 100,000 workers on the very lowest pay rates because they simply could not afford to wait," she added.
"The lowest paid need to spend almost all of what they earn to survive, and this wage increase will be vital to them while generating income for local businesses that also need a boost."
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