The Fair Work Commission has today handed down its annual wage review decision, deciding to increase the minimum wages in all modern awards by 3.5%.
The National Minimum Wage has also been increased by 3.5%, taking it from $24.10 per hour ($915.90 per week) to $24.95 per hour ($948.00 per week).
These increases will take effect from the first full pay period commencing on or after 1 July 2025.
Size of the increase
In its announcement, the Commission noted that, since July 2021, modern award rates have declined by 4.5 percentage points relative to inflation and that they had refrained from addressing this in previous annual wage reviews due to concerns that doing so might result in higher inflation.
The Commission stated that today’s decision would now “go at least some of the way towards correcting what has happened over the last four years”, following the Reserve Bank of Australia’s announcement that inflation has returned to its target range of 2-3 percent.
Despite this, the 3.5% increase represents the lowest annual increase since 2021.
The Commission acknowledged that the Superannuation Guarantee contribution rate is also set to rise to 12% from 1 July 2025 and indicated that this had had a moderating impact on their decision. Other moderating factors identified included changing US trade policies and some indications of weakness in the accommodation and food services sector.
Business NSW and Australian Business Industrial had been involved in the annual wage review process and had urged the Commission to implement a more moderate increase of 2.5%.
Gender equality issues
As part as last year’s annual wage review decision, the Commission announced that it would commence a research project to identify occupations and industries that may be subject to such undervaluation, and that this project will be used to underpin future proceedings.
In today’s decision, the Commission provided an update on this, drawing attention to its decision of 16 April 2025, where it established principles for the identification and elimination of gender-based undervaluation.
It noted that its next priority will be to review all professional classifications in modern awards (classifications for which a university degree is required as a minimum) that have not yet been reviewed in accordance with these principles
What do I need to do?
Employers should ensure that employees who are paid in accordance with a modern award or the National Minimum Wage receive the appropriate pay increase by the relevant, effective date.
Employers who do not pay strictly in accordance with award terms (e.g., those that pay above award rates, annualised salaries or ‘flat rates’ of pay) should ensure that their payments will still satisfy all their obligations under the relevant award/minimum wage once the increases apply.
Employers who pay in accordance with an enterprise agreement should ensure that the base rates of pay under the agreement is no lower than the increased relevant modern award rates of pay, particularly if the agreement was made several years ago.
When will the changes come into effect?
The changes come into operation from the first full pay period on or after 1 July 2025.
Further information
View the Commission’s decision on the Annual Wage Reveiw 2025.
View transcript of the Annual Wage Review 2025 announcement.
