The Fair Work Commission handed down its Annual Wage Review decision on 2 June 2026, and it’s a bigger change than usual — around 2.8 million employees, roughly one in five Australian workers, are affected. If you’ve got staff on award rates, getting your payroll updated properly matters for more than just ticking a compliance box. Get it wrong and you’re looking at back-pay, ATO attention, and a cash flow surprise you didn’t need heading into the new financial year.

What actually changed

The Commission’s decision covers both the National Minimum Wage and modern award rates, and the two moved by different amounts:

• National Minimum Wage: up 6%, crossing $1,000 a week for the first time — it now sits at $1,004.90 per week, or $26.44 an hour.
• Modern award rates: up 4.75% across all classification levels.
• Effective date: the first full pay period starting on or after 1 July 2026.

The C13 rate is being phased out

If you employ entry-level staff, there’s an extra change worth knowing about. The C13 rate — currently the lowest ongoing wage rate in modern awards — is being phased out over three stages, with the C12 rate becoming the new floor. In this first stage, C13 is getting an extra 1.2% on top of the general 4.75% rise, for a combined 5.95% increase — roughly a third of the gap between C13 and C12. The C14 trainee rate (for the first six months of employment) moves by the same 5.95%, up to $978.10 a week or $25.74 an hour.

Why the increase landed where it did

The FWC panel had a genuinely difficult balance to strike this year. On one side, ongoing inflation — partly driven by global uncertainty and a cautious Reserve Bank — has been eating into what low-paid workers can actually afford. Unions pushed for the full 6% across every rate to compensate. On the other side, a blanket 6% rise across all award rates risked adding real pressure onto business costs and inflation itself. The 4.75% award increase is the panel’s attempt to keep workers no worse off in real terms since July 2025, without tipping the scale too far the other way. Accommodation, food services, retail and health care — the sectors most reliant on award wages — will feel this the most.

What to actually do about it

• Update your payroll rates before your first July pay run. Whether you’re on Xero, MYOB or something else, the new minimums need to be in there before you process pay — this also keeps your STP Phase 2 reporting accurate.
• Check any enterprise agreement against the new award minimums. An enterprise agreement can never pay below the applicable modern award rate — if yours now sits under the new threshold, you’re required to match it.
• If you’ve got staff on annualised salaries, check the numbers still stack up. Their total package needs to comfortably cover all award entitlements at the new rates, or you risk an underpayment building up quietly in the background. The Fair Work Commission’s Annual Wage Review page has the exact figures for your industry if you want to double-check before running final payroll.

None of this is complicated on its own, but it’s easy for one of these to slip through when you’re already stretched thin — an outdated rate in the payroll system, an annualised salary nobody’s rechecked in a year. If you’d rather have someone else keep this current, get in touch and we’ll make sure your payroll is sitting on the right numbers.