The Fair Work Act 2009 (FWA) requires the Fair Work Commission (FWC) to conduct an Annual Wage Review.
This review has two main functions, being to:
- Review the National Minimum Wage – the wage that applies to every national system employee who is not covered by a Modern Award or an Enterprise Agreement; and
- Review Modern Award minimum wages.
Increases granted will generally take effect on 1 July of each year.
FWC Decision
On Tuesday morning, 3 June 2025, the FWC’s Expert Panel released its 2025 Annual Wage Review Decision.
The Expert Panel, consisting of:
- FWC President Hatcher;
- FWC Vice President Asbury;
- FWC Deputy Presidents Millhouse and O’Neill; and
- Expert Panel lay members Professor Baird, Mr Cully and Ms Labine-Romain,
determined that both the National Minimum Wage and minimum rates in Modern Awards will increase by 3.5%.
When will the increase have effect?
The 3.5% increase will have effect from the first full pay period on or after 1 July 2025.
It is important to understand what the words ‘first full pay period’ actually mean.
Practically speaking, the increase will apply to the pay period that commences either on, or after 1 July 2025.
Example: If you have a payroll period that includes 1 July 2025, for example, a fortnightly payroll that runs from 23 June – 6 July 2025 you will need to apply the increase from the pay period that commences on 7 July 2025: this is the next full pay period that commences after 1 July 2025.
Why 3.5%?
The Decision reflects the Expert Panel’s consideration of the real value of wages for Modern Award covered employees.
President Hatcher stated in the Decision that 20.7% percent of Australian employees are covered by a Modern Award, and the Expert Panel was guided by the fact that the real value of Modern Award wages has been decreasing since July 2021.
Specifically, President Hatcher revealed that this ‘real value’ has declined by 4.5% relative to inflation, which we know has been consistently high in recent years.
The Expert Panel considered the impact of an increase to those employees that are award-reliant, noting that the characteristics of this workforce:
- Is disproportionately female;
- Consists of mainly of part time and casual employment types; and
- Is considered to be low paid.
In conclusion of this consideration, the Expert Panel found that an increase to Modern Award wages would have limited impact on wages growth across the economy.
The Decision recognises the increase will impact more significantly on those industries that are award-reliant (see box below) and that in other industries, such as mining and finance, where the proportion of award-reliant employees is negligible, the impact of the increase will be minimal.
Modern Award Industries
President Hatcher stated that there are four industry sectors that have a higher proportion of Modern Award reliant employees, being:
| Accommodation and food services |
| Health care and social assistance |
| Retail trade |
| Administrative and support services |
IRiQ Law Can Assist You to Be Ready
Not sure what this all means for you, or not sure where to start?
Some practical steps employers can take now include:
- Talk to your payroll provider. Ensure that payroll is aware of the increase, and when it will, in reality, take effect at your workplace. If your payroll provider is external to your business, confirm the operative date in writing;
- In line with above, ensure that any allowances that need to be increased are actioned;
- If you pay an employee an annualised wage, for example, in line with the requirements in the Clerks – Private Sector Award 2020, or the Hospitality Industry (General) Award 2020, the annualised wage will need to increase, and so to will the value of the entitlements bought out by the annualised wage. This includes the value of annual leave loading, overtime and penalties. Check you your employment contract too.
Other steps are:
- Talk to IRiQ’s experienced legal team. As a boutique employment law firm, the team can assist you with understanding the increase and what it means.
For example:
- If you pay your award covered employees higher than the award rate, does that overaward amount need to increase, or can it absorb the 3.5%? These are questions you can talk through with us, as the answer will depend on your documentation and employment contract.
- If you have an enterprise agreement in place, the team is available to update your wages schedule to include the value of the increase.
Final Thoughts
The 2025 Annual Wage Review confirms a moderate but necessary increase in minimum wage rates, particularly for Australia’s most vulnerable and award-reliant workers. Employers now have a clear window to review wage structures and ensure full compliance with the updated statutory obligations.
At IRiQ Law, we support employers in understanding and implementing wage increases that meet legal obligations while aligning with business operations. Whether you need to review employment contracts, adjust over-award payments, or update enterprise agreements, our expert team can help you take the right steps with confidence.
Contact us today to ensure your workplace is compliant and well-prepared for the 1 July 2025 changes.
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