02 4578 1300
02 4578 1300

Blog

Minimum wages increase from 1 July 2026

Minimum wages increase from 1 July 2026 - A middle-aged female small business owner sits at the front counter of a warm, bustling Australian bakery-cafe named "The Daily Grind." She has an expression of focused concern as she uses a calculator and pen to review a printout titled "Fair Work Commission - Wage Adjustment Guide." In the background, a young male employee in an apron wipes down the counter near a shelf of fresh bread loaves, while a few customers sit at tables. The scene is viewed from outside through the large glass storefront window during sunset, with the cafe's location sign reading "Richmond, New South Wales, Australia."
Image by Gemini

Small business owners need to prepare for a significant hit to their payroll next month. The Fair Work Commission (FWC) finalised its Annual Wage Review last Tuesday. It announced a 4.75% increase to minimum award wages from the first full pay period on or after 1 July 2026. Furthermore, due to a “structural adjustment” aimed at phasing out the lowest pay brackets, the National Minimum Wage will jump by roughly 6%, rising from $24.95 to $26.44 per hour ($1,004.90 per week for a 38-hour week).

For small businesses already battling tight margins, this decision adds substantial pressure to the cost of doing business. FWC President Adam Hatcher acknowledged the challenge, noting that global supply shocks—such as Middle East conflicts driving up fuel and oil costs—have complicated the economic landscape. With the Reserve Bank (RBA) forecasting inflation to hit 4.8% by June, the FWC argued that a substantial hike was necessary to prevent low-paid workers’ living standards from falling further behind.

Unsurprisingly, the decision has raised alarms across the business community. Many economists warn that forcing businesses to absorb a 6% wage hike will likely fuel the wage-price spiral. This will potentially force the RBA to keep interest rates higher for longer or hike them further. Treasurer Jim Chalmers defended the decision as a “very effective balance.” However, small businesses will now face the choice of absorbing these higher labor costs or passing them on to consumers.

Next Steps for Business Owners:

  • Audit Your Payroll: Check the new modern award rates applicable to your industry ahead of the 1 July deadline.

  • Review Pricing Strategies: Assess whether your current pricing can absorb the 4.75% to 6% labor cost increase, or if adjustments are required to maintain viability.

  • Payday Super contributions: The wage increase coincides with the change in superannuation guarantee requirement to pay employee super contributions on the same day as wage payments. Are you ready for this?

Categories