The Fair Work Commission's Expert Panel today announced an increase to minimum wages following the Annual Wage Review 2025-26.
Last year, the national minimum wage (NMW) and the minimum rates of pay in modern awards were increased by 3.75%.
This year, the Expert Panel determined to increase the NMW and the minimum rates of pay in modern awards by 3.5%, effective from the first full pay period on or after 1 July 2025.
The decision will increase the NMW to $24.95 per hour or $948.00 per week (based on a 38-hour week) from 1 July 2025.
The Commission's principal consideration was the decline in the real value of modern award wages since July 2021 due to inflation, despite the higher increases following the 2022–23 review, which resulted in a 5.75% increase to the minimum rates of pay in modern awards and an effective 8.6% increase in the NMW.
In announcing its decision, the Expert Panel relevantly stated:
This reduction in real modern award wages and the NMW has been the result of the spike in inflation which commenced in 2021 and peaked in late 2022. The continuation of this inflationary episode has meant that, over the last three annual wage review decisions, the Commission has repeatedly deferred taking any action to reverse this ongoing decline in real wages out of a concern that this might result in the further persistence of higher inflation. The result has been that living standards for employee's dependent on modern award wages have been squeezed and the low paid have experienced greater difficulty in meeting their everyday needs.
The Reserve Bank of Australia's (RBA) assessment that inflation has sustainably returned to its target range of 2–3 per cent indicates that this inflationary episode is now over. That provides us with an opportunity to go at least some of the way towards correcting what has happened over the last four years by awarding a real increase to modern award wages and the NMW.
The Expert Panel also referred to various moderating factors taken into account, including:
- the upcoming increase in the Superannuation Guarantee contribution rate (from 11.5% to 12% from 1 July 2025);
- the less favourable economic outlook resulting from the United States' trade polices; and
- weaknesses in the accommodation and food services sector where a significant number of modern award-reliant workers are employed.
What does this mean for employers?
The Expert Panel's decision will affect millions of Australian workers, including those who are covered by a modern award (and, in some cases, an enterprise agreement) and award/agreement-free employees paid the NMW.
Employers must implement these increases from the first full pay period on or after 1 July 2025. Failure to implement these increases will result in underpayments which could lead to legal action including the imposition of financial penalties for breaches of the Fair Work Act 2009, particularly sections 45 and 50 which prohibit contravening a modern award or enterprise agreement.
If you would like more information about the legal implications of these increases and how they may affect your business, please contact our experienced Employment and Workplace Relations team for assistance.
You can read more about the Annual Wage Review 2025-26 at these links:
Annual Wage Review 2025 – Announcement of Decision
Annual Wage Review Decision 2025
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