Minimum wage increase 2026: How it affects your business
The Fair Work Commission has released the outcome of the 2026 Annual Wage Review, with increases to the National Minimum Wage and award wages taking effect from 1 July 2026.
While this is good news for employees, it does mean a bit of extra work behind the scenes for employers. It’s not just a matter of updating pay rates, you’ll also need to check things like employee classifications, allowances, penalty rates and your payroll settings to make sure everything lines up.
One thing to watch is timing. The new rates applied from the first full pay period starting on or after 1 July 2026, so depending on your payroll cycle, the change may not have taken effect immediately.
It’s also worth looking at the bigger picture. A wage increase can affect more than just hourly rates, it can flow through to super, leave costs and overall cash flow. Taking a bit of time now to understand the full impact can help you stay on top of your payroll and avoid any surprises.
What is the new minimum wage for 2026?
From 1 July 2026, the National Minimum Wage is:
- $1,004.90 per week for a 38 hour working week
- $26.44 per hour
The National Minimum Wage generally applies to adult employees in the national workplace relations system who are not covered by an award or registered agreement.
Employers should check the relevant award and classification for each employee rather than applying the National Minimum Wage to the entire workforce. Award rates can vary according to an employee’s classification, age, duties, employment type, qualifications and working hours.
Allowances, overtime rates, weekend rates and public holiday rates may also change when they are calculated using an award wage. Updated pay guides and the Fair Work Pay and Conditions Tool can help employers confirm the applicable minimum rates.
First Class Accounts Ovens & Murray can help review your payroll records, update approved rates in your payroll system and check that the new rates are being applied from the correct pay period.
When does the minimum wage increase apply?
The new rates apply from the first full pay period starting on or after 1 July 2026.
For example, if a weekly pay period starts on Monday 29 June and ends on Sunday 5 July, that pay period began before 1 July. The new wage rate would generally apply from the following full pay period beginning on Monday 6 July.
Employers should confirm the start and end dates of their weekly, fortnightly or monthly payroll cycles before changing employee rates. Applying the increase from the wrong date can cause an underpayment or an unnecessary correction in a later pay run.
This is also a useful time to check that each employee’s payroll record includes the correct:
- Employment type
- Award and classification
- Ordinary hourly or weekly rate
- Overtime and penalty settings
- Allowances
- Leave accrual settings
- Superannuation details
Payroll changes should be reviewed before the pay run is processed. Leaving the update until after payroll has been finalised can result in additional calculations, corrected payslips and back payments.
If First Class Accounts Ovens & Murray manages your payroll, we make sure approved rate changes are entered accurately and applied to the correct pay period.
How will the wage increase affect your payroll costs?
The effect on payroll will depend on the number of employees receiving an increase, their ordinary hours, their award classifications and whether higher base rates also change overtime, penalties or allowances.
If your workforce includes a large percentage of employees that are currently on minimum wage rates, the increase will put extra pressure on your cashflow.
For example, if you employ 20 full time employees on the National Minimum Wage and pay them fortnightly, the ordinary wage component of the pay run increases from $37,920 to $40,196.
That is an additional $2,276 in ordinary wages each fortnight.
At the 12 per cent superannuation guarantee rate, this example could also add approximately $273.12 in superannuation for the pay period, assuming all of the additional wages form part of ordinary time earnings. The combined increase would then be approximately $2,549.12 each fortnight before considering other employment costs. The superannuation guarantee rate remains 12 per cent for the 2026 to 2027 financial year.
Other costs that may be affected include:
- Overtime calculated from the employee’s base rate
- Weekend, evening and public holiday penalty rates
- Allowances linked to an award rate
- Workers compensation premiums
- Payroll tax where the employer’s taxable wages are above the relevant threshold
- Leave liabilities based on the employee’s current rate of pay
The example also assumes all 20 employees are award and agreement free adults receiving the National Minimum Wage. The actual cost will differ where employees are covered by awards, work different hours or receive rates above the applicable minimum.
A payroll cost forecast can show the expected increase per pay cycle, month and financial year. This gives you a more useful figure for cash flow planning than looking at the hourly wage change in isolation.
First Class Accounts Ovens & Murray can help you calculate the likely payroll impact using your actual employee records and pay cycle.
Include the higher payroll cost in your cash flow planning
A wage increase creates a recurring cost rather than a single payment. Employers therefore need to plan for the additional amount across the full financial year.
Start by estimating the increased cost of each regular pay run. Include ordinary wages, expected overtime, superannuation and other employment costs that are likely to change. The revised payroll figure can then be added to your cash flow forecast.
From 1 July 2026, Payday Super also changes the timing of superannuation payments. Employers are required to pay superannuation guarantee contributions in connection with each payday rather than relying on the previous quarterly payment cycle.
This means the wage increase and Payday Super both need to be reflected in payment scheduling. Although more frequent super payments may reduce the size of quarterly outgoings, they increase the amount leaving the bank account around each payroll date.
Your forecast should allow for:
- The higher gross wage amount
- PAYG withholding
- Superannuation paid in connection with each payday
- Supplier and operating payments due near payroll dates
- BAS and other ATO obligations
- Seasonal changes in income
Reviewing these commitments together can identify pay periods where available cash may be tighter. You can then plan the timing of discretionary spending, follow up overdue invoices and maintain an appropriate cash reserve.
First Class Accounts Ovens & Murray can help update your cash flow forecast and payment schedule so the increased payroll cost is reflected in the numbers you use to manage the business.
Check your payroll software and employee records
Payroll software may provide updated award information or prompts, although employers remain responsible for paying employees correctly. An automatic software update does not remove the need to confirm the employee’s award, classification and applicable rate.
Before processing the first affected pay run, check whether rates need to be updated manually. You should also review payroll rules connected to the base rate, including overtime, penalties, allowances and leave payments.
Testing the first pay run before finalisation can help identify incorrect rates or calculations. The payroll report should be compared with a recent pay run so significant changes can be investigated before employee payments are released.
This review is particularly important where payroll knowledge sits with one person or changes are entered without a documented checking process. A reliable payroll process should continue when a staff member is away and should not depend on someone remembering each manual step.
First Class Accounts Ovens & Murray provides a contracted payroll service, which means payroll work is covered without gaps caused by staff absences. We can process regular payroll, maintain records and help make sure approved changes are entered accurately and on time.
Talk to us about preparing for the wage increase
The minimum wage increase will affect your payroll costs and cash flow, particularly if you employ staff on minimum or award rates.
If you’re concerned about the impact, it’s worth reviewing your payroll and planning ahead so there are no surprises when the new rates apply.
First Class Accounts Ovens & Murray can help you review your payroll, update wage rates and understand how the increase may affect your cash flow.
Talk to the team about making sure you're up to date with the 2026 minimum wage increase.
Frequently asked questions
What is the Australian minimum wage from 1 July 2026?
From 1 July 2026, the National Minimum Wage is $1,004.90 per week for a 38-hour week or $26.44 per hour. It generally applies to adult employees in the national system who are not covered by an award or registered agreement.
When does the 2026 award wage increase start?
The 4.75 per cent increase to minimum award wages applies from the first full pay period starting on or after 1 July 2026. The exact starting date therefore depends on the employer’s pay cycle.
Does the minimum wage increase affect superannuation costs?
A higher ordinary wage can increase the amount of superannuation an employer pays. The superannuation guarantee rate is 12 per cent for the 2026 to 2027 financial year, and Payday Super applies from 1 July 2026.