The Fair Work Commission handed down its Annual Wage Review decision on 2 June 2026. It took effect from the first full pay period on or after 1 July 2026.
| Measure | Increase | New rate |
|---|---|---|
| National Minimum Wage | +5.97% | $26.44/hr ($1,004.90 per 38-hour week) |
| Modern award minimum rates | +4.75% | Varies by award and classification |
This is the first time the National Minimum Wage has exceeded $1,000 a week. The decision affects around 2.7 million minimum wage and award-reliant workers — roughly 21.1% of the Australian workforce.
If you employ under an award, this is not optional and it is already in effect.
The headline number is not the cost
A 4.75% award increase does not cost you 4.75%. It costs closer to 6.5%, because several other obligations are calculated on top of the new base.
Take a full-time employee on $65,000:
| Line | Before | After 4.75% | Increase |
|---|---|---|---|
| Base wage | $65,000 | $68,088 | $3,088 |
| Superannuation @ 12% | $7,800 | $8,171 | $371 |
| Payroll tax @ 5.45% (NSW, if above threshold) | $3,543 | $3,711 | $168 |
| Workers compensation (~2%, industry dependent) | $1,300 | $1,362 | $62 |
| Total employment cost | $77,643 | $81,332 | $3,689 |
The true increase is $3,689, not $3,088 — about 19% more than the base figure suggests.
Now scale it:
| Team size | Base increase | True cost increase |
|---|---|---|
| 5 employees | $15,440 | $18,445 |
| 10 employees | $30,880 | $36,890 |
| 20 employees | $61,760 | $73,780 |
For a twenty-person business on a 10% net margin, that is $737,800 of additional revenue required simply to stand still.
Payroll tax only applies above your state threshold — $1.2m in NSW, $1m in VIC, $1.3m in QLD. Workers compensation rates vary substantially by industry. Run your own figures.
What it landed on top of
The award increase did not arrive alone. Three other changes hit the same payroll in the same month.
Superannuation Guarantee at 12%. The rate reached its legislated ceiling on 1 July 2025 and stays there. No further increases are scheduled — but 12% of a higher base is more money.
Payday Super, from 1 July 2026. Super must now reach each employee’s fund within seven business days of payday, replacing the quarterly cycle. The rate did not change; the timing did, compressing the cash conversion cycle by up to three months. Research put the average SME’s additional working capital requirement at over $124,000, and 68% of businesses had made no preparation.
Fuel excise restored to 53.7c/L on 3 August 2026 — a 17.1c step-up from the July rate, and above the pre-crisis baseline.
Award increase, super timing and fuel, all inside five weeks. That is why FY27 feels harder than the percentages alone suggest.
What to do
1. Confirm you have applied it correctly
The increase applies from the first full pay period on or after 1 July 2026 — not from 1 July itself. If your fortnightly cycle began 29 June, the old rates applied to that period.
Check the actual award, not a summary. Percentage increases apply to classification minimums, and if you pay above award, your obligation is to the new minimum rather than to an automatic uplift of your over-award rate. Many employers over-apply and give away money they did not owe.
2. Check whether annualised salaries still cover the award
This is where most exposure sits. An annualised salary must leave the employee no worse off than the award across the year, including overtime, penalties and loadings.
A salary set in 2024 that comfortably cleared the award may not clear the 2026-27 minimum. Underpayment is not excused by good intentions, and the reconciliation obligation is yours.
3. Reprice, and use the reason
You now have an externally verifiable, checkable, published reason for a price increase — the Fair Work Commission decision of 2 June 2026.
That is the easiest pricing conversation available to you. Customers can look it up. It is not your margin ambition, it is a regulated cost increase applying to your entire industry simultaneously.
Note the arithmetic: on a $1m business at 10% net margin, a 5% price rise adds $50,000 — considerably more than most award increases cost. Businesses that reprice annually alongside the award review never experience it as a shock. Businesses that absorb it for three years then attempt a large correction lose customers.
4. Do not reach for headcount first
When Australian businesses hit cost pressure, roughly 44% say letting someone go is their first move. It is also the reason the 1-4 employee segment has shrunk by nearly 39,000 businesses since 2021-22.
An award increase makes each employee more expensive. It does not, on its own, make them unprofitable. Work out which of your work makes money before you decide which of your people to lose.
Where to go next
- The True Cost of an Employee — the full on-cost stack
- Payday Super: The $124,000 Working Capital Hole
- The 5% Price Rise vs the 10% Cost Cut — run your numbers
- Five Things to Do Before You Make Someone Redundant
- Australian Business Compliance Calendar 2026-27
Sources: Fair Work Commission Annual Wage Review 2026 decision, handed down 2 June 2026; Minister for Employment and Workplace Relations media release; Australian Taxation Office; ScotPac SME Growth Index; ABS Counts of Australian Businesses. Worked examples are illustrative — award rates vary by classification and payroll tax by state. Confirm your obligations against the relevant modern award.