The Fair Work Commission has announced a 3.5% increase to the National Minimum Wage and all Modern Award minimum wage rates, effective from 1 July 2025.
What This Means for You
- Now is the time to assess award coverage and classification levels for your workforce to ensure compliance
- For employees who are not covered by an award, you must ensure their pay meets or exceeds the new National Minimum Wage
- In Australia, it is unlawful to pay any employee less than the national minimum, regardless of whether they’re covered by an award
- New rates must be applied from the first full pay period on or after 1 July 2025
A Quick Refresher on Modern Awards
Each year, we use this opportunity to remind our clients about the existence and relevance of modern awards, and how they can impact your business.
There are currently 121 modern awards in Australia. These set out minimum terms and conditions of employment and typically apply based on:
- Industry (e.g. Retail, Hospitality, Building & Construction), or
- Occupation (e.g. admin/clerical under the Clerks Award, or personal services under the Hair and Beauty Award)
While these are just a few examples, the system is designed to cover the vast majority of employers within the national workplace relations system.
Understanding which award applies is just the first step. Once confirmed, employers must ensure each employee is correctly classified to determine the appropriate rate of pay. Classification levels (and their corresponding rates) are based on factors such as duties performed, level of responsibility, required skills or licences (e.g. forklift), experience, and in some cases, age.
Now is an ideal time to reassess whether any of your employees may be covered by a modern award and to ensure they are accurately classified. Misclassification can result in underpayments and compliance issues, so it’s important to regularly review award coverage and classification descriptions, especially in light of updated minimum wage rates.
What You Need To Do
- Review the modern award classifications applicable to each member of your workforce
- Ensure your non-award covered employees meet or exceed the new National Minimum Wage
- Update minimum rates in your payroll systems by 1 July 2025
- Pay particular attention to casual, part-time, and minimum-wage employees, especially in award-reliant sectors like retail, hospitality and care services
Note: The Fair Work Commission typically publishes updated wage tables toward late June. In the meantime, you can estimate new rates by applying a 3.5% increase to current rates. We are happy to assist with these preliminary calculations if needed.
What If I Already Pay Above Award Wages
If your employees already receive above-award pay, you may not need to increase their rates, however, this depends on how they are engaged and what is clearly outlined in their written employment agreement.
- Over-award payments can often be used to absorb the increase, provided the employee’s base pay still meets or exceeds the new minimum.
- For those on annualised wage arrangements, ensure their total yearly pay still covers all entitlements (like overtime, penalties, and allowances) under the new rates.
- If you use individual flexibility arrangements, enterprise agreements, or salaried contracts, it’s essential to check that employees remain better off overall compared to the updated award rates.
How We Can Help
Navigating award coverage, wage updates and compliance obligations can be complex. If you are unsure where to start or want peace of mind that your business is meeting its obligations, please reach out to our team at Allan Hall HR.
We can assist you with:
- Interpreting and/or identifying your award obligations
- Calculating new minimum rates, including casual loadings, overtime, and allowances
- Reviewing over-award payments, salaried agreements, and annualised arrangements
- Auditing your payroll to ensure full compliance with updated minimums
- Providing tailored guidance specific to your industry and workforce
Our team at Allan Hall HR will continue to monitor the release of updated wage tables and can provide further guidance as needed. In the meantime, please contact us on 1300 916 764 or contact us here if you would like assistance in reviewing your payroll and preparing for the changes.
HR Support Centre Demo
We invite all our clients to explore our complimentary HR Support Centre, designed to help you navigate your employee obligations and stay updated on legislative changes. This valuable resource offers ready-to-use HR templates, best practice guidance, checklists, and access to a vast library of articles on compliance and employee management. Book in a free demo today.