Minimum wage increase 2026: National Minimum Wage exceeds $1000 per week
The Fair Work Commission has published its Annual Wage Review 2026.
The outcome of the review is that:
the National Minimum Wage (NMW) will increase by approximately 6% from $948.00 to $1004.90 per week (that is from $24.95 per hour to $26.44 per hour); and
minimum wage rates in modern awards will increase by 4.75%.
These changes will take effect from 1 July 2026.
Key takeaways for employers
- Employers should carefully review the legislation or instruments applicable to them and their employees to ensure they are compliant with the Commission’s decision.
- Employers must increase rates of pay for employees paid the NMW, or under a modern award or other industrial instrument from the first pay period on or after 1 July 2026.
- Employers who pay their employees under an industrial instrument, such as an enterprise agreement, should also review the wage rates under that instrument to ensure they are equal to or above the new minimum award rates.
- Employers who pay their employees above the minimum wage rates by using set-off clauses or annualised wage arrangements may be able to absorb the increases without making any changes. However, employers should review these changes carefully particularly in light of the Federal Court decisions regarding set off arrangement (see our related article, ‘Records and remuneration: the compliance duo that employers can’t ignore').
Rationale for increase
In accordance with the Fair Work Act 2009 (Cth), the Commission was ‘required to take into account a number of identified matters including the performance and competitiveness of the national economy, the need to achieve gender equality, promoting social inclusion through increased workforce participation, and relative living standards and the needs of the low paid.’
The Commission acknowledged that this year’s decision was particularly challenging. It says that while economic growth and productivity improved during 2025, inflation has risen sharply in 2026, driven largely by the global uncertainties which the Commission described as a ‘wild card’ for the Australian economy.
The Commission noted that the real wages of modern award-covered employees remain lower than they were in July 2021, and identified that the ‘real wage gap which opened between the rate of the CPI and modern award wage rates has particularly affected the living standards of the low paid and their capacity to meet their needs determined that it should at minimum protect those workers from any further erosion in the real value of their wages’.
According to the Commission, the 4.75% increase is designed to close this ‘real wage gap’ while concluding that ‘regrettably’, it would not be ‘practicable or responsible’ to order a higher percentage increase to close the gap completely.
If you require assistance understanding how the Annual Wage Review 2026 affects your business, please contact our Workplace Relations team.
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