The Fair Work Commission has announced a 3.5% increase to the national minimum wage and modern award wages, effective from the first full pay period on or after 1 July 2025.

Approximately 20.7% of all employees in Australia are paid at the applicable minimum wage rates in the 121 modern industry and occupational awards currently in operation. Accordingly, such employees, and their employers, are affected directly by this decision. Importantly, the modern award-reliant workforce is:

• disproportionately female
• more than two-thirds of such employees work part-time hours
• more than half are casual employees
• more than a third are low-paid. 

Because of the part-time and low-paid characteristics of the modern award-reliant workforce, the wages paid to them constitute only about 10.5% of the national ‘wage bill’.

There are four main industry sectors with the highest numbers of modern award-reliant employees, namely

• Accommodation and Food Services
• Health Care and Social Assistance
• Retail Trade
• Administrative and Support Services

These account for over two-thirds of all modern award-reliant employees. The 3.5% increase handed down represents an important adjustment in scale with the rate of inflation over the past few years.

What does this mean for you?

Businesses paying Award rates and conditions will need to ensure they are still compliant from July 1 2025. For those businesses paying ‘above Award’, it’s important not to get complacent. Confirming that your conditions are still meeting and exceeding the minimum conditions of your Award is very important. Especially where your rates are ‘inclusive’, or otherwise attract penalties, loadings and allowances which may also be adjusted.

“We see too many businesses dismiss these Award increases on the assumption that their rates are ‘above’ or ‘absorb’ all loadings, allowances and penalties”.

Too often, these same businesses:

• don’t have the contracts (or wording) in the first place, or
• are no longer paying enough margin above the minimum rates to make this true.

With the risk of underpayment, potential penalties and the criminalisation of intentional underpayment, it’s never been more important to do your due diligence.

We urge business leaders and internal HR practitioners to take this mid year opportunity to review all agreements, contracts and rates across your workforce to ensure continued compliance and prevent underpayments, potential claims or penalties.

Updated Pay Guides will be forthcoming for all minimum rates across the 121 Awards with rates effective from 1 July 2025. The guides will be uploaded to the Fair Work website HERE by July 1.

You can read the full decision of the Fair Work Commission HERE.

Your Next Step

FCHR Members – we’ve got you sorted 
Full Circle HR Members will automatically receive your updated Pay Guides, along with your comprehensive individual Mid Year Reports by the 1st week of July a party of your Member Benefits. We can also assist with a review of your wages with our Conditions Review and Remedy. To book, contact us at www.fullcirclehr.com.au/contact-us.

Non-Members
New and existing cliuents can also can book a Conditions Review and Remedy with our team at www.fullcirclehr.com.au/contact-us.