Annual Wage Review Decision 2026

The Fair Work Commission has today handed down its annual wage review decision, deciding to increase the minimum wages in all modern awards by 4.75%.

The National Minimum Wage has also been increased by approximately 6%, taking it from $24.95 per hour ($948 per week) to $26.44 per hour ($1004.90 per week).

The number of employees engaged on National Minimum Wage is very small. As a result, the main impact on employers will be the 4.75% modern award increase.

These increases will take effect from the first full pay period commencing on or after 1 July 2026.

Size of the Increase

In its announcement, the Commission noted that, the determination of this year’s Review outcome has been particularly challenging because of the unusual degree of complexity of the matters they have had to take into account. The Middle East conflict has caused consequential disruption to oil supplies and has accelerated inflation. This has added uncertainty to the economy at least in the near future.

Australian Business Lawyers & Advisors represented Business NSW and Australian Business Industrial in the annual wage review process and urged the Commission to implement a more moderate increase of 3.5%.

Structural adjustment to lowest paid classifications in modern awards

Modern award wage rates will be increased by 4.75%, effective from 1 July 2026. 

However, this is subject to a structural adjustment to the very lowest-paid classifications in modern awards, namely classifications paid at the C13 and C14 wage rates. The C13 rate is the lowest wage rate applicable to ongoing employment in the modern award system, and the C14 wage rate is a special entry-level wage rate applicable to a limited initial period of employment. As foreshadowed in last year’s Review, the Commission has decided to phase out classifications paid at the C13 level and to make the next wage level up, the C12 level, the lowest wage rate for ongoing employment. 

This will occur in three stages, with the first stage being implemented as part of this Review. This will involve the C13 rate being increased by an additional amount representing one-third of the difference between the C13 and the C12 rates. The C14 rate will be increased by the same percentage amount as the C13 rate to maintain its current relativity to C13. These adjustments will result in the lowest wage rate in the modern award system applicable to ongoing employment being $1004.90 per week or $26.44 per hour, and the lowest wage rate applicable to entry-level employment for a period of no more than six months being $978.10 per week or $25.74 per hour. 

Gender Equality Issues

The Commission intends to review particular award classifications in order to eliminate gender-based undervaluation in modern awards and ensure that female workers receive equal remuneration for work of equal or comparable value. 

The Commission has now completed the review of priority awards which it initiated in the 2024 Review decision, and this will result in the phasing-in of wage increases to children’s services employees, dental assistants, pathologists, disability home care workers, pharmacists and a range of other health professionals over the next few years. ABI and BNSW have been active in the proceedings conducted by the Commission to influence the extent to which award wages are varied on gender-based undervaluation grounds.

The Commission will next move to progress the review of all professional classifications in modern awards which was initiated in the 2025 Review decision. The Commission will endeavour to complete this by the time of the 2027 Review. In addition, the Commission will hear and determine major gender undervaluation cases concerning nurses and flight attendants over the next year.

What do employers 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 overall 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 base 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 2026.

To view the Commission’s decision click here. A transcript of today’s announcement is also available here. 

If this has raised any questions for your business, please get in touch with one of our lawyers for a confidential chat.