Following its Annual Wage Review, the Fair Work Commission has announced that the National Minimum Wage will increase by 3.5% from 1 July 2025.
This wage increase represents an overall increase to the current national minimum wage from $915.00 to $948.00 per week. In terms of hourly rates of pay, the wage increase represents an increase from the current $24.10 per hour to $24.95 per hour.
Additionally, all minimum wage rates in the modern awards will also increase by 3.5%. However, at this current point in time, the Fair Work Commission has not announced increases to the allowances contained in modern awards, but it is expected to do so on 1 July 2025.
In summary, the wage increase will apply to:
- employees on the national minimum wage;
- employees covered by modern awards; and
- some employees covered by Enterprise Agreements, if the base rate of pay falls below the increased rate of pay in an applicable modern award.
The reason behind the wage increase is to address the current financial pressures affecting households and the increasing impact inflation has on the living standards of the lowest-earning Australians today.
The Fair Work Commission’s Expert Panel, in deciding on the 3.5% increase, stated that it was prepared to take corrective action to return minimum wages to their real values in response to the increased inflation in today’s economy.
What Does This Mean for Employers?
To ensure that the increase in minimum wages does not catch employers out, the following steps should be taken:
- Commence reviews and appropriate adjustments for all award-covered employees before 1 July 2025 to ensure compliance with the wage increase.
- Ensure that employees who are paid minimum wage rates under the national minimum wage, modern award, or other industrial instrument (e.g., an Enterprise Agreement) receive an increase in pay in the first period on or after 1 July 2025.
- Where an Enterprise Agreement covers employees, employers will also need to ensure that the entitlements under the Enterprise Agreement do not fall below the entitlements contained in a modern award.
- Finally, while ‘set-off’ clauses may be useful in absorbing the 3.5% increase, employers should carefully review their employees’ wages to ensure they are not below the new minimum wage rates.
Changes to the Superannuation Guarantee
Along with the increase in the minimum wage, from 1 July 2025, the minimum superannuation guarantee rate will also increase from 11.5% to 12%. This increase represents the last of the legislated incremental increases to the superannuation guarantee rate.
Employers should also consider the further change to superannuation, which is expected to commence on 1 July 2026, when ‘Payday Super’ will be introduced. From this date, employers will be required to make superannuation guarantee contributions at the same time employees are paid their salaries or wages.
At present, employers are only required to make superannuation contributions quarterly and by the deadlines imposed by the Australian Taxation Office.
Employers should utilise 2025 to prepare for this change and consider implementing changes to current payroll systems and processes.
Seek Legal Advice
When in doubt, employers should obtain legal advice to ensure that employees are being correctly remunerated for their roles.
WilliamsonBarwick can assist employers in conducting reviews of contracts, enterprise agreements, and payroll systems to ensure employers are not unintentionally underpaying employees and are compliant with current legislation and relevant industrial instruments.
Please contact the team at WilliamsonBarwick if you require any assistance navigating these changes to minimum wages. We would be happy to assist.
