If you’re an employer, the annual wage changes may affect your payroll. In this blog article, we break down what’s changing, who’s impacted, and how to stay compliant. We also explain how Payroller will assist you with these updates.
What is the annual wage change on 1 July 2025 in Australia?
From the first full pay period on or after 1 July 2025:
- The National Minimum Wage will increase from $24.10 to $24.95 per hour
- All Modern Award minimum wages will increase by 3.5%
This year’s increase is the lowest annual adjustment since 2021, but it still represents a notable change for many small and medium businesses, especially those with award-covered employees.
Why has the Fair Work Commission increased wages?
The Commission outlined several reasons for this decision:
1. Modern award wages have not kept up with inflation
Since July 2021, the real value of award wages has declined by 4.5% relative to inflation. The 3.5% increase is designed to help restore some of this lost purchasing power, now that inflation has begun to stabilise.
2. Superannuation is also increasing
From 1 July 2025, the Superannuation Guarantee (SG) will rise from 11.5% to 12% for all ordinary time earnings paid on or after this date. The Commission considered this additional employer cost when determining the appropriate wage increase.
Employers should also keep in mind that Payday Super will require more frequent payments by 1 July 2026, further heightening payroll demands for business owners.
3. Gender pay equity remains a focus
The Commission continues to address gender-based undervaluation in certain professions and industries, particularly those dominated by women. Recent reviews have confirmed that historical gender assumptions have led to undervaluation, and ongoing reforms aim to correct this imbalance.
Types of employees affected by the annual wage change
The wage increase applies to:
- Employees paid under a Modern Award
- Workers on the national minimum wage
- Employees on an Enterprise Agreement, where base rates fall below the updated Award rates
If your business operates in sectors such as retail, hospitality, administration, trades, healthcare, or any other award-covered industry, you will need to review and update your pay structures to ensure compliance.
How to prepare for the annual wage change in 2025
To remain compliant with Fair Work obligations, employers should:
1. Check employee pay rates
Ensure that your employees’ pay is adjusted to reflect the new minimum wage or award rate by the first full pay period on or after July 1, 2025. If you use Payroller, we’ll prompt you to make this change.
2. Review flat or annualised rates
If you pay above-award rates, use flat hourly rates or annual salaries, make sure those still meet or exceed all award entitlements (including penalties and loadings).
3. Update enterprise agreements if needed
Employers using an enterprise agreement must confirm that their base rates are not below the new award minimums. Failing to update pay rates correctly could lead to backpay obligations or penalties for underpayment.
For more information, you can read the full Fair Work Commission documents here:
Payroller makes complying with every year’s minimum wage changes easier
Payroller is purpose-built to help Australian small businesses run payroll quickly and accurately. Our software will prompt you to make this change accordingly by the first of July.
With Payroller, you get:
- ATO-compliant payroll with automatic Single Touch Payroll (STP) reporting
- Support team available if you have questions
- Award rate updates built into your payroll software
Whether you’re new to employing staff or simply short on time, Payroller helps keep your payroll compliant in just a few clicks.
Don’t get caught out in July
This wage increase is a key compliance task for employers ahead of the new financial year. Let Payroller take care of it for you with award rate updates built into your payroll software.
Already using Payroller? You’re covered.
Not using Payroller yet? Try it free and see how easy payroll can be.
