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. $1,004.90 per week for a 38 hour working week
2. $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:

1. Employment type
2. Award and classification
3. Ordinary hourly or weekly rate
4. Overtime and penalty settings
5. Allowances
6. Leave accrual settings
7. 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:

1. Overtime calculated from the employee’s base rate
2. Weekend, evening and public holiday penalty rates
3. Allowances linked to an award rate
4. Workers compensation premiums
5. Payroll tax where the employer’s taxable wages are above the relevant threshold
6. 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:

1. The higher gross wage amount
2. PAYG withholding
3. Superannuation paid in connection with each payday
4. Supplier and operating payments due near payroll dates
5. BAS and other ATO obligations
6. 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.

Payroll health check: warning signs your business should not ignore

Payroll is one of those business functions that needs to work properly, every time.

When it does, people are paid correctly, super is processed, leave balances make sense, and business owners can get on with running the business. When it does not, the problems can become stressful, costly and time-consuming.

Payroll issues do not usually appear overnight. They tend to build slowly through small process gaps, manual fixes and workarounds that become part of the usual routine. A spreadsheet gets added because the system does not quite do what is needed. A pay run takes longer because there are more checks to complete. One staff member becomes the only person who knows how a certain payroll task is handled.

At first, these issues may feel manageable. Over time, they can create risk for the business, the payroll team and employees.

The Australian Payroll Association recently shared an article outlining seven signs your payroll function may need an independent health check. It is a useful read for business owners and managers who want to understand where payroll risk can start. You can read it here. 

For many small and medium businesses, the message is simple. If payroll is becoming harder, more manual or more dependent on one person, it is worth looking at the process before it becomes a larger problem.

Why payroll problems can build quietly

Payroll is detailed work. It relies on accurate employee information, correct award or agreement interpretation, working systems, reliable timesheets, leave records, superannuation processing and reporting obligations.

When one part of the process is messy, the pressure usually falls on the person processing payroll. They may spend more time checking information, fixing errors, chasing missing data or reconciling information between systems.

This can happen even when the payroll person is experienced and capable. In many cases, the problem is not the person. The issue sits in the process, the system setup or the way information moves through the business.

For example, if time and attendance data have to be manually entered into payroll software, there is more room for error. If leave balances are adjusted outside the system, there is more to check. If payroll reporting is held in separate spreadsheets, the business may not have one reliable source of information.

This is why payroll should be reviewed as a whole process, rather than only looking at the final pay run.

Common signs your payroll process needs attention

One of the most common signs is the use of manual workarounds. If payroll depends on spreadsheets, manual calculations or repeated corrections, the system may not be properly set up for the way the business operates.

Another warning sign is when pay run cut-off dates keep moving earlier. This often happens because more time is needed to check, correct and reconcile payroll before wages are processed. That can place pressure on employees, supervisors and payroll staff.

It is also risky when one person holds all the payroll knowledge. Many businesses have someone who knows exactly how payroll works, including the exceptions, the history and the fixes. That knowledge is valuable, but if it sits with one person only, the business can be exposed when that person is away, leaves the business or becomes unavailable.

Payroll corrections becoming more common can also point to a process issue. Occasional corrections happen, but regular adjustment runs, retrospective changes and repeated pay queries may suggest the system or workflow needs review.

Employee questions are another sign to watch. If employees are regularly asking about wages, overtime, allowances or leave balances, those questions may be showing that something in the process is unclear, inconsistent or incorrect.

Payroll systems need to work together

Payroll rarely sits on its own anymore. It often connects with rostering, time tracking, HR, finance and accounting software.

When those systems do not talk to each other properly, the business can end up entering the same information more than once. This adds time and increases the chance of mistakes.

A common example is timesheet information being exported from one system, adjusted in a spreadsheet, and then entered into payroll software. Another example is leave being approved in one place but managed manually somewhere else.

Good systems should reduce double-handling. They should also make it easier to check information, keep records and understand what has happened in each pay cycle.

This is where practical app advice can make a difference. The right payroll and business apps need to suit the business, the industry, the number of employees, the pay conditions and the way information is collected. It is not enough to have software in place. The setup needs to match the real workflow.

Why regular payroll review matters

Payroll requirements can change over time. Awards, enterprise agreements, superannuation obligations, Single Touch Payroll reporting and business processes can all shift.

If payroll has not been reviewed for some time, there may be gaps that the business has not noticed. This does not mean something has been done intentionally wrong. It may simply mean the business has grown, the team has changed, the system has been adjusted over time, or old processes no longer suit how the business operates.

A payroll review can help identify where risk sits. It can also highlight where systems, approvals, reporting and record keeping can be improved.

For business owners, this is about reducing stress and avoiding avoidable problems. Payroll is too important to rely on memory, manual fixes or processes that only one person understands.

How First Class Accounts Ovens & Murray can help

First Class Accounts Ovens & Murray supports business owners with reliable bookkeeping, payroll and business app advisory services.

Our role is to help make sure payroll is processed accurately, on time and in line with the information available. We also help business owners improve the processes that sit around payroll, including timesheets, payroll software, leave tracking, superannuation payments and reporting.

Because First Class Accounts Ovens & Murray provides a fully contracted service, business owners do not have to worry about payroll being interrupted when someone is away. The work is covered, the process is managed, and the business has reliable support.

We also help identify where payroll is becoming too manual or where software is adding extra work rather than reducing it. This may include reviewing how data moves between systems, whether payroll records are being handled consistently, and whether the current app setup still suits the business.

For many businesses, the issue is not that payroll software is missing. The issue is that the system has not been set up, maintained or connected in a way that supports the day-to-day process.

When to ask for help

It may be time to review your payroll process if you are relying on spreadsheets, processing regular corrections, answering more employee pay questions, or depending heavily on one person to keep payroll moving.

It is also worth seeking support if payroll is taking longer than it should, if pay runs feel rushed, or if information is being entered into more than one system.

The earlier these issues are addressed, the easier they usually are to fix.

Payroll is about more than paying wages. It affects trust, cash flow, employee confidence and business operations. When payroll is handled properly, people are paid correctly, records are easier to manage, and the business has better information to work with.

If payroll has become harder than it should be, First Class Accounts Ovens & Murray can help you review the process, improve the systems and put reliable payroll support in place. Get in touch.

FAQs about payroll health checks

What is a payroll health check?

A payroll health check is a review of payroll processes, systems and records to identify errors, risks, manual workarounds and gaps. It helps business owners understand whether payroll is being managed accurately, consistently and in line with current requirements.

How do I know if my payroll process needs review?

Your payroll process may need review if you rely on spreadsheets, regularly process corrections, receive more employee pay queries, or depend on one person to manage payroll knowledge. These signs can point to process, system or setup issues.

Can First Class Accounts Ovens & Murray manage payroll for my business?

Yes. First Class Accounts Ovens & Murray provides payroll support as part of its bookkeeping and business support services. This can include payroll processing, superannuation payments, leave tracking, reporting and practical support to improve payroll systems.

Payroll disaster recovery planning for small business

Most business owners have contingency plans for things like stock delays, staff shortages, supplier issues, or cash flow pressure. Payroll is often treated differently. It is expected to just keep running in the background.

Until something goes wrong.

A cyber attack, flood, fire, internet outage, software failure, or even the sudden loss of a key team member can stop payroll processing quickly. When that happens, businesses are left trying to answer some very serious questions under pressure.

• How will staff get paid?

• Can payroll records still be accessed?

• What happens with superannuation, STP reporting, and leave balances?

• Who actually knows how the payroll process works?

These are not situations most business owners expect to face. Yet they are becoming more common across businesses of all sizes.

The Australian Payroll Association recently shared a firsthand story about a payroll office destroyed by fire and the steps taken to continue paying employees during the disruption. It is a reminder that payroll continuity is not just about systems and compliance. It is about protecting your people and maintaining trust during difficult situations.

You can read the original article here.

Why payroll continuity matters

Payroll is one of the most sensitive operational areas in any business. Employees rely on being paid correctly and on time to cover mortgages, rent, groceries, bills, and family expenses.

When payroll is delayed or inaccurate, the impact is immediate.

Alongside the financial pressure, staff confidence can quickly drop if there is uncertainty around pay. For employers, this can also create reputational issues, compliance risks, and operational stress at a time when the business is already dealing with disruption.

This is why payroll disaster recovery planning matters.

It helps ensure there is a process in place before problems happen, rather than trying to build one in the middle of a crisis.

The risks facing payroll systems today

Years ago, many payroll disruptions were caused by physical events like fires, floods, or office closures. While those risks still exist, cyber security threats are now one of the biggest concerns for businesses.

Payroll systems contain highly sensitive information including:

• Employee bank details

• Tax file numbers

• Residential addresses

• Pay rates and salary data

• Superannuation details

• Leave balances and employment records

A ransomware attack or system breach can lock businesses out of payroll systems for days or even weeks.

For small and medium businesses, this can create serious operational issues very quickly, especially where payroll knowledge sits with one person or there is limited documentation around processes.

This is one reason cloud based systems and secure payroll software have become increasingly important. Good systems improve accessibility, reduce manual handling, and support better backup processes.

Questions business owners should be asking

Many businesses assume they are prepared for disruption until they start working through real scenarios.

Some important questions to consider include:

Could payroll still run if your office became inaccessible tomorrow?

If systems, devices, or paper files could not be accessed, would payroll still be able to operate remotely?

Are payroll records backed up properly?

It is important to understand where payroll data is stored, how often backups occur, and whether those backups are tested regularly.

Does more than one person understand the payroll process?

A common issue in small businesses is having payroll knowledge held by one staff member. If that person is unavailable unexpectedly, payroll processing can become difficult very quickly.

Could staff be paid manually if systems failed?

While nobody wants to rely on manual payroll processing, having documented procedures can help businesses continue operating during outages or system disruptions.

Have cybersecurity protections been reviewed recently?

This includes password management, multi factor authentication, software updates, user access permissions, and staff training around phishing or suspicious emails.

Payroll continuity is also about communication

One of the points raised in the Australian Payroll Association article was the importance of communication during disruption.

Employees need updates that are timely, practical, and honest. If there is a delay or issue affecting payroll, people want to know:

• What has happened

• What is being done about it

• When updates will be provided

• What arrangements are in place

Strong communication helps reduce uncertainty and maintain confidence during stressful situations.

Businesses that communicate well during disruption often recover more smoothly because employees feel informed and supported throughout the process.

The role of documented systems and processes

One of the most effective ways to reduce payroll risk is having clear documented procedures.

This includes things like:

• Payroll processing checklists

• System login and access procedures

• STP reporting processes

• Superannuation payment schedules

• Employee onboarding steps

• Leave and award interpretation procedures

• Backup and recovery instructions

When payroll processes only exist in someone's head, the business becomes vulnerable.

Documented systems help create consistency, reduce mistakes, and allow other team members or external providers to step in when needed.

Why regular reviews matter

Disaster recovery plans should not sit untouched in a folder for years.

Business systems change. Software changes. Staffing changes. Risks change.

Reviewing payroll processes regularly helps identify gaps before they become serious problems. It also allows businesses to test whether systems and backup procedures actually work when needed.

Even simple reviews can make a significant difference.

How First Class Accounts Ovens & Murray can help

At First Class Accounts Ovens & Murray, payroll is managed with consistency, structure, and reliable processes.

We support businesses with:

• Payroll processing

• STP compliance

• Superannuation management

• Payroll system support

• Process documentation

• Cloud based bookkeeping and payroll systems

• Backup support during staff absences

• Ongoing bookkeeping and payroll continuity

Our 100 per cent contract service model means there are no gaps when staff are away or unexpected issues arise. Your payroll and bookkeeping processes continue running accurately and on time.

For many business owners, having experienced support behind payroll creates confidence that the business can keep operating properly even when challenges arise.

Planning ahead protects your business and your people

Nobody expects a major disruption to happen to their business. The reality is that unexpected events do occur, and payroll is one area where preparation matters.

Having reliable systems, documented processes, secure software, and experienced support in place can reduce stress significantly when problems arise.

Payroll continuity planning is not just about software or compliance requirements. It is about protecting employees, maintaining trust, and helping businesses continue operating during difficult periods.

If you would like support reviewing your payroll systems, processes, or continuity planning, First Class Accounts Ovens & Murray can help you put practical systems in place that support your business long term. Get in touch today. 

Why outsourcing payroll is becoming a smarter choice for Australian businesses

Payroll has always been one of the most important operational responsibilities in a business. Employees expect to be paid correctly and on time. Regulators expect businesses to meet their obligations. Business owners need confidence that their systems and processes are working properly behind the scenes.

What has changed in recent years is the level of scrutiny around payroll compliance and employee underpayments across Australia.

Large businesses, national brands, franchises, and employers across multiple industries have faced investigations, repayments, penalties, and reputational damage after discovering payroll errors that had been occurring for years. In many cases, the businesses involved did not realise there was a problem until the underpayments had grown into significant liabilities.

The Australian Payroll Association recently shared an article discussing the growing issue of wage theft and underpayments across Australia. You can read the original article here.

While these stories often involve large organisations, the risks are not limited to major corporations. Payroll problems can happen in businesses of any size, particularly when payroll is handled internally without the time, systems, or expertise required to keep up with changing obligations.

For many businesses, this is one of the reasons outsourcing payroll is becoming less of a convenience and more of a practical risk management decision.

Payroll is becoming more complex

Australian payroll legislation is detailed and constantly evolving. Businesses need to manage:

• Modern awards

• Overtime calculations

• Leave entitlements

• Superannuation obligations

• Allowances and penalties

• Fair Work requirements

• Legislative updates

Even with payroll software in place, mistakes can still happen if systems are not configured properly or updated consistently.

A common misunderstanding is that payroll software automatically guarantees compliance. In reality, software still relies on accurate setup, correct award interpretation, and regular oversight.

Something as small as an incorrect award interpretation, overtime setting, or allowance configuration can create ongoing underpayments across multiple employees. If those errors continue for months or years, the financial impact can become substantial.

This is one reason payroll reviews and ongoing oversight matter so much.

Internal payroll processes often create hidden risks

Many businesses start by managing payroll internally. In the early stages of business growth, this can seem manageable.

Over time though, staffing structures become more complicated. Rosters change. Awards vary between employees. Leave accruals become harder to track. Legislative updates continue to roll through.

Payroll responsibilities are then often added onto an already busy administration or finance role.

The challenge is that payroll errors usually do not appear immediately. They build quietly over time.

Without regular reviews and experienced oversight, businesses may not identify issues until employees raise concerns, Fair Work becomes involved, or a full payroll review is completed.

Outsourcing payroll helps reduce this risk by ensuring payroll is managed consistently by professionals who work with payroll systems, compliance obligations, and legislative changes every day.

Why outsourcing payroll makes practical sense

For many businesses, outsourcing payroll is not about removing responsibility. It is about improving accuracy, reducing risk, and ensuring continuity.

Consistency matters

One of the biggest risks with internal payroll is disruption when staff are sick, on leave, or leave the business.

At First Class Accounts Ovens & Murray, our fully contracted service model means your payroll continues without interruption. Processing deadlines are met consistently, and your business is not relying on one internal person to manage everything.

Payroll legislation changes regularly

Award updates, superannuation changes, and Fair Work requirements continue to evolve.

Outsourcing payroll gives businesses access to ongoing support from professionals who stay across those changes and apply them correctly within payroll systems and processes.

Payroll errors can become expensive

Incorrect employee classifications, missed overtime, or leave calculation issues can create substantial liabilities over time.

Having experienced payroll professionals review and manage payroll processes helps reduce the likelihood of these issues occurring.

Better systems improve operations

Outsourced payroll is not just about processing wages.

It also involves reviewing workflows, improving payroll processes, helping businesses use the right software, and ensuring systems are configured correctly from the beginning.

At First Class Accounts Ovens & Murray, we work with businesses to improve payroll systems and support better day to day operations through practical process improvements and reliable app integration support.

The impact of wage theft legislation

Payroll compliance has become even more important following changes to Australian wage theft laws.

From 2025, intentional wage theft became a criminal offence under federal law. Significant penalties can now apply, including potential imprisonment in serious cases.

Most business owners are not intentionally underpaying employees. However, the legislation reflects how seriously payroll compliance is now being treated across Australia.

Businesses can no longer afford to take a “set and forget” approach to payroll.

Regular reviews, accurate records, compliant systems, and experienced oversight are now essential parts of business operations.

Signs your payroll processes may need support

Businesses often wait until problems appear before reviewing payroll processes.

Some signs it may be time to seek external payroll support include:

• Payroll taking too much internal time

• Staff uncertainty around awards or entitlements

• Frequent payroll corrections or adjustments

• Concerns about compliance obligations

• Growth in employee numbers or locations

• Difficulty keeping up with legislative changes

• Reliance on one internal staff member for payroll knowledge

If any of these issues sound familiar, it may be worth reviewing whether your current payroll processes are still working effectively for your business.

Payroll accuracy supports employee trust

Accurate payroll does more than meet compliance requirements.

Employees want confidence that they are being paid correctly and on time. Business owners want reliable records, accurate reporting, and fewer operational issues.

Good payroll processes support both.

At First Class Accounts Ovens & Murray, we provide reliable payroll support designed to reduce stress, improve consistency, and help businesses stay on top of changing payroll requirements.

Whether you need fully outsourced payroll support, help reviewing your current systems, or guidance around payroll software and processes, having experienced support in place can help reduce risk before problems grow into something much larger.

FAQs about Outsourced Payroll Services

Why are businesses outsourcing payroll services?

Businesses outsource payroll to reduce compliance risk, improve accuracy, save internal time, and ensure payroll continues without disruption when staff are unavailable or business operations grow.

Can outsourced payroll help reduce payroll errors?

Yes. Outsourced payroll providers work with payroll systems, awards, and compliance requirements regularly. This helps identify setup issues, reduce processing mistakes, and keep payroll aligned with current legislation.

What should businesses look for in an outsourced payroll provider?

Businesses should look for a provider with experience in Australian payroll compliance, reliable systems, ongoing support, accurate record keeping, and a service model that ensures continuity and consistency.

Some junior wage rates to be abolished

What it could mean for your business

The Fair Work Commission has confirmed upcoming changes to junior wage rates following a legal case brought by the Shop, Distributive and Allied Employees’ Association (SDA).

If your business employs younger workers under the Retail Award, Fast Food Award, or Pharmacy Award, these changes may affect your payroll costs, staffing budgets, and cashflow planning over the next 12 months.

For many businesses, particularly those with large teams of younger employees, this is something worth preparing for early rather than waiting until the changes come into effect.

What is changing with junior wage rates?

Traditionally, junior employees have been paid a percentage of the adult wage rate based on their age. This has applied across many industries and awards, particularly in retail, hospitality, fast food, and pharmacy.

The SDA argued that workers aged 18, 19, and 20 were often performing the same duties as older employees but receiving lower pay simply because of their age.

Following the outcome of the case, the Fair Work Commission has announced that junior wage rates under the following awards will be phased out:

• General Retail Industry Award
• Fast Food Industry Award
• Pharmacy Industry Award

Under the proposed changes, employees aged 18 to 20 who have worked with the same employer for more than six months will become entitled to the full adult pay rate for their classification.

Employees aged 18 to 20 who have been employed for less than six months will continue to receive junior rates during that initial period.

Workers under the age of 18 are not currently impacted by these changes and will remain on junior rates.

At this stage, the Fair Work Commission has indicated the changes may begin from 1 December 2026, although further hearings are still expected to finalise the implementation process.

Why this matters for business owners

For some businesses, the increase in wage costs may be manageable.

For others, particularly those employing larger numbers of younger workers, the impact could be substantial.

Businesses in industries such as retail, fast food, and pharmacy often rely heavily on employees aged between 18 and 20. Once adult wage rates apply, payroll costs could increase across:

• Base hourly wages
• Penalty rates
• Superannuation
• Leave loading
• Payroll tax obligations, where applicable

Even relatively small increases across multiple employees can quickly affect overall labour costs.

For example, if several employees move from junior rates to full adult rates at the same time, weekly payroll expenses may increase significantly without any increase in sales or revenue to offset the change.

This is why planning ahead matters.

The flow on effect to cashflow

One of the biggest risks for businesses is not necessarily the wage increase itself. It is the impact the increase can have on cashflow and day to day operations.

Higher payroll costs can affect:

• Supplier payment schedules
• Stock purchasing capacity
• Rostering decisions
• Profit margins
• Business growth plans
• Available working capital

Businesses already operating with tight margins may feel additional pressure if they are not forecasting these changes early.

This is particularly important for businesses with fluctuating seasonal income or inconsistent trading periods.

Having accurate bookkeeping and up to date reporting becomes increasingly important when wage costs shift.

Without reliable data, it becomes much harder to make informed staffing and budgeting decisions.

What businesses should be doing now

Although the changes are not expected to begin until late 2026, now is a good time to review your current workforce and understand where your business may be exposed.

Some practical steps include:

Review employee age profiles

Identify how many employees are currently aged between 18 and 20 and which awards they fall under.

This gives you a clearer picture of the potential increase in payroll costs.

Review employment duration

Because the proposed changes apply after six months of employment, businesses should understand which employees may transition first.

Update payroll forecasting

Forecasting future wage costs now can help avoid surprises later.

Even basic payroll modelling can help you understand how the changes may affect weekly, monthly, and annual cashflow.

Review pricing and margins

Some businesses may need to review pricing structures or operational efficiencies to absorb increased labour costs.

Make sure payroll systems are accurate

Award interpretation and payroll compliance are already complicated for many businesses. Upcoming wage changes will add another layer.

Having reliable payroll processes and accurate systems in place will help reduce errors and avoid compliance issues.

Good systems make these changes easier to manage

Changes like this highlight why reliable bookkeeping and payroll support matter.

When your payroll systems, reporting, and business data are accurate, it becomes easier to:

• Understand the real cost of staffing
• Plan for wage increases
• Forecast cashflow
• Adjust budgets
• Make informed business decisions

This is also where the right business apps and payroll systems can help.

Many businesses are still relying on manual processes or outdated systems that make wage management harder than it needs to be.

First Class Accounts Ovens & Murray works with businesses to improve payroll processes, reporting accuracy, and business systems so owners have reliable information they can actually use.

Don’t wait until the changes begin

Waiting until wage increases take effect can leave businesses scrambling to adjust budgets and cashflow.

Planning ahead gives you more options and more time to make practical decisions for your business.

If you employ workers under the Retail, Fast Food, or Pharmacy Awards, now is the right time to review your payroll position and understand the possible impact.

First Class Accounts Ovens & Murray can help you:

• Review your payroll setup
• Run wage cost scenarios
• Forecast cashflow impacts
• Improve payroll and reporting systems
• Identify process improvements that save time and reduce errors

Small adjustments made early are often easier to manage than reacting once costs increase.

If you are unsure how these junior wage changes may affect your payroll costs or cashflow, First Class Accounts Ovens & Murray can help you assess the numbers and plan ahead with practical support and accurate reporting. Get in touch today. 

What are junior wage rates?

Junior wage rates are reduced pay rates that apply to employees under a certain age under many modern awards. These rates are usually calculated as a percentage of the adult wage rate.

Which awards are affected by the junior wage rate changes?

The announced changes currently apply to the General Retail Industry Award, Fast Food Industry Award, and Pharmacy Industry Award.

How can businesses prepare for higher payroll costs?

Businesses should review employee age profiles, update payroll forecasts, assess cashflow impacts, and ensure payroll systems are accurate and compliant before the changes take effect.

Contractor or Employee 

What Business Owners Need to Know in 2026

Should a worker be treated as a contractor or an employee?

This decision affects payroll, superannuation, tax, workers compensation and compliance. It is your responsibility as a business owner to classify each worker correctly.

In 2026, worker classification remains a focus area for the ATO and Fair Work Ombudsman. Getting it wrong can lead to back payments, penalties and unnecessary disruption to your business.

What is an employee?

An employee:

• Works in your business and forms part of your operations
• Has rights and entitlements under the Fair Work Act 2009
• Has agreed duties and usually an expectation of ongoing work
• Is covered by your workers compensation insurance
• Must be paid superannuation guarantee
• Is processed through payroll with PAYG withholding and Single Touch Payroll reporting

What is a contractor?

A contractor:

• Operates their own business and usually advertises their services
• Provides an ABN and invoices for work performed
• Is responsible for their own insurance, equipment, licences and tax
• Has independence and control over how and when work is performed
• Can usually delegate work within their own business
• May or may not be entitled to super, depending on the engagement

Understanding the multi-factor test

There is no single rule that determines whether someone is an employee or contractor.

Courts apply a multi-factor test. This means the entire working relationship is examined. No one factor is decisive.

Recent court decisions have placed greater emphasis on the written contract where it clearly reflects the working arrangement. However, if the day-to-day reality does not match the contract, that will still be considered.

Each relationship must be assessed individually.

Engaging sole traders requires extra care

Having an ABN does not automatically make someone a contractor.

Many sole traders are engaged mainly for their personal labour. If they cannot delegate work, operate under your direction, are integrated into your business and do not genuinely run an independent enterprise, they may meet the definition of an employee.

The ATO and Fair Work Ombudsman continue to monitor these arrangements closely.

Key factors to assess

When determining whether a worker is a contractor or employee, consider:

• Is the worker engaged to produce a specific result or primarily for their labour?
• Can they delegate or subcontract the work?
• How much control do you exercise over how, when and where the work is performed?
• Is the role integral to your business operations?
• Do they advertise and perform work for other clients?
• Who bears the risk and cost of fixing defective work?
• Who provides tools and equipment?

No single factor is decisive. The overall relationship must be considered.

Not sure? Review early

If you are uncertain, review ATO guidance before finalising an arrangement.

It is possible to reassess an arrangement after several months if circumstances change. However, leaving a worker incorrectly classified increases risk.

If a worker does not meet the contractor definition and you do not require a permanent employee, engaging them as a casual employee is often the compliant option. This ensures super is paid correctly, PAYG is withheld through payroll and reporting obligations are met.

The cost of getting it wrong

If a worker should have been treated as an employee, your business may be liable for back payment of wages, leave entitlements, allowances and superannuation. Additional charges and penalties may apply.

Incorrect classification can also disrupt payroll records and impact cash flow planning.

How First Class Accounts Ovens & Murray can help

Worker classification affects payroll setup, super processing and compliance reporting.

At First Class Accounts Ovens & Murray, we review your arrangements, ensure payroll systems are set up correctly and confirm super obligations are handled properly.

We provide reliable, consistent support so payments are accurate and on time, and your records reflect the correct employment status.

What is the difference between a contractor and an employee in Australia?

An employee works within your business and is entitled to super, PAYG withholding and Fair Work protections. A contractor operates their own business, invoices for services and has greater independence and control.

Can a sole trader be treated as a contractor?

Yes, but only if they genuinely operate an independent business. Having an ABN alone does not automatically make someone a contractor.

What happens if I classify a worker incorrectly?

You may be liable for back payment of wages, leave entitlements, superannuation and possible penalties.

Is it safer to hire someone as a casual employee instead of a contractor?

If a worker does not meet the contractor definition, engaging them as a casual employee is often the compliant option.

Digital payroll and small business payroll software

Why payroll systems still cause problems for business owners

Many businesses still rely on paper based employee records or basic spreadsheets to manage payroll. These methods are time consuming and often lead to incomplete or inaccurate records. For business owners juggling staff, clients, suppliers, and compliance, payroll can quickly become a source of stress.

In 2026, payroll expectations are higher than ever. Accurate records, timely payments, and correct reporting are no longer optional. Businesses need systems that support compliance while also providing clarity around wage costs and cash flow.

Payroll compliance is still a risk for small businesses

The Australian Taxation Office and the Fair Work Ombudsman continue to monitor payroll practices closely, particularly within small and medium sized businesses. Common issues include incorrect pay rates, missed superannuation payments, and incomplete records. These problems rarely appear overnight. They tend to build up quietly over time.

Payroll rules in Australia change regularly. Updates to modern awards, superannuation obligations, and reporting requirements mean that payroll needs ongoing attention. For business owners, keeping up with these changes manually is difficult and often unrealistic.

Digital payroll systems, including small business payroll software, are designed to manage this complexity.

Modern payroll platforms integrate directly with accounting software, apply rule updates automatically, and streamline reporting to the ATO. This reduces the risk of errors while saving time each pay run.

Payroll setup and ongoing payroll services

Payroll software on its own does not guarantee accurate or compliant payroll. The system still needs to be set up correctly, maintained properly, and used consistently each pay run.

First Class Accounts Ovens & Murray provides end to end payroll services for business owners who want payroll handled properly, without having to manage it themselves. This includes payroll setup, ongoing payroll processing, and compliance support.

Payroll is processed accurately and on time, with pay rates, leave entitlements, superannuation, and reporting obligations handled correctly. This reduces risk and removes the pressure of managing payroll internally, while giving business owners confidence that payroll is covered every pay cycle.

Reliable payroll services you can depend on

If your payroll systems feel outdated or unreliable, it may be time to review how payroll is managed in your business. The right system, combined with experienced support, can remove stress and create clarity.

We can advise on small business payroll software that suits how your team actually works, then manage payroll for you ongoing.

Contact us today to discuss payroll services for your business.

What is small business payroll software?

Small business payroll software is a digital system used to calculate wages, manage leave and superannuation, and meet reporting requirements such as Single Touch Payroll, with records stored securely and updated in line with current rules.

How does digital payroll help with compliance?

Digital payroll systems apply current tax rates, superannuation rules, and reporting requirements automatically, reducing the risk of errors.

Can a bookkeeper manage payroll for my business?

Yes. A qualified bookkeeper can set up payroll systems, process payroll, manage reporting, and ensure records are accurate and compliant.

Automation can ease your business workload

Small and medium-sized businesses are spending on average 120 hours a year on admin tasks, according to recent research into productivity at UK SMBs.

If your people are spending 120 hours wading through tedious and unproductive admin, that’s bad for the business and for your overall efficiency. Fortunately, technology and software automation can go a long way towards automating the low-level admin tasks.

While this research is now several years old, the underlying issue remains relevant in 2025. Many small businesses still spend significant time on manual administration, particularly around bookkeeping, invoicing, payroll processing, and reporting.

What has changed is the availability and maturity of automation tools. Businesses now have access to more connected systems than ever before. The challenge is no longer whether automation exists, but whether it has been implemented in a way that actually reduces workload without creating new problems around accuracy and compliance.

This is where structured processes and reliable bookkeeping support become critical.

Better productivity through automation

Automation is an important way to ease your business workload, with a host of different business apps and cloud solutions offering ways to automate your admin.

With ‘smart business tools’ increasing in number and choice, software is utilising automation algorithms, artificial intelligence (AI), machine learning and cognitive solutions to help remove the mundane admin tasks from your workflows.

In 2025, most businesses already use some level of automation, often without realising it. Bank feeds, invoice reminders, payroll calculations, and reporting dashboards are now standard in many systems.

However, more automation does not automatically mean better outcomes. Poorly connected apps, incorrect setup, or lack of oversight can result in duplicated data, incorrect reporting, or compliance issues that only surface later.

Productivity gains come from using the right automation in the right places, supported by regular reconciliation and review. This ensures automation reduces workload rather than shifting the work elsewhere.

Core processes that will benefit from automation

Automated bookkeeping

Just take a photo of your receipts, expenses and invoices and ‘optical character recognition’ (OCR) technology will digitise the output and pull it through into your accounts software. No data entry, no human error and no lost receipts! We can do the rest to ensure your records are accurate.

Receipt capture and OCR technology have continued to improve, making it easier for businesses to collect source documents and reduce manual data entry. This supports better record keeping and faster processing.

What automation does not remove is the need to check that receipts are valid, correctly coded, and meet ATO requirements. A bank transaction alone is still not a source document. Without proper review, automated bookkeeping can give a false sense of accuracy.

First Class Accounts Ovens & Murray supports businesses by reviewing automated data, reconciling transactions, and ensuring records are accurate, complete, and compliant. This is what turns automation into something you can actually rely on.

Automated credit control 

Chasing up debts and late-paying customers takes time. Automated credit control apps track your debtor numbers and automatically sends out customised chaser emails as soon as an invoice is late. This reduces your credit control time, speeds up cash collection and cuts your aged debtor figure.

In 2025, cash flow pressure remains one of the biggest risks for small businesses. Automated reminders can help maintain consistency and reduce the emotional load of chasing payments.

For these tools to work effectively, invoices must be issued correctly and debtor balances must be accurate. If bookkeeping is behind or reconciliations are incomplete, automation may chase the wrong amounts or miss overdue invoices entirely.

When supported by regular bookkeeping, automated credit control becomes a practical way to improve cash flow confidence and reduce late payments.

Automated payment collection

The easier it is to pay you, the faster your customers will pay. Automated card payments and cloud-based Direct Debit solutions allow you to automatically take payment from a customer as soon as an invoice is due. Some solutions will even automate the invoice matching and bank reconciliation process.

Payment automation continues to be one of the most effective ways to reduce debtor days. Direct debit and card payment integrations reduce friction for customers and support more predictable cash inflows.

When implemented properly, some systems assist with payment matching, but this still requires review. Automation supports the process, it does not replace accountability.

Automated reporting and forecasting 

The better your reporting and business intelligence, the easier it is to make informed decisions about your company strategy. Accounting platforms and fintech tools now offer automatic, real-time reporting and forecasting, giving you access to the important numbers and metrics, fast.

Access to real time reports is now common, but confidence in those reports is not. Automated reporting only works when the underlying data is accurate and up to date.

Businesses often have dashboards showing cash flow, profit, and forecasts, yet still feel unsure because transactions have not been reconciled or payroll and super obligations have not been allowed for correctly.

Reliable bookkeeping turns automated reports into decision making tools rather than guesswork. This is where automation and human oversight work together.

Talk to us about embracing the power of automation

If your admin is starting to hold you back, come and talk to us about how automation can pick up some of the heavy lifting as well as giving you the metrics you need for decision making. 

We can review you business processes and identify the automation opportunities, helping you choose the best apps to drive your business efficiently.

In 2025, automation works best when it is paired with structure, consistency, and accountability. Adding more apps without reviewing processes often increases workload rather than reducing it.

First Class Accounts Ovens & Murray works with business owners to review existing systems, clean up data, and ensure automation is supporting accurate bookkeeping, reliable payroll, and clear reporting. The focus is on fewer errors, better cash flow visibility, and less time spent fixing issues later.

If your systems feel messy, unclear, or unreliable, it may be time to review how automation is being used rather than adding more of it.

Contact us to discuss your automation opportunities. 

Answering questions about bookkeeping automation

What is business automation in bookkeeping?

Business automation uses software to reduce manual tasks such as data entry, invoicing, payment reminders, and reporting.

Does automation replace the need for a bookkeeper?

No. Automation supports bookkeeping but still requires oversight to ensure accuracy, compliance, and correct reporting.

Can automation improve cash flow?

Yes, when combined with accurate invoicing, credit control, and reconciliation, automation helps identify issues earlier and improve payment timing.

What should be automated first in a small business?

Bookkeeping processes, invoicing, payment collection, and reporting usually deliver the most practical benefits.

Who should help set up automation tools?

A bookkeeper with business app advisory experience can ensure tools are integrated properly and supported by accurate processes.

How holiday payroll outsourcing helps you manage a busy year end

The end of the year brings extra activity for many businesses. Staff take leave, customers expect quick responses, and year end obligations build up. Payroll often sits at the centre of this pressure, because pay must be correct, compliant, and processed on time regardless of how busy things become.

Holiday payroll outsourcing is a practical way to keep everything running smoothly, especially when your own team is stretched or taking time off. It removes the risk of mistakes during a period when payroll becomes more complex and your attention is needed elsewhere.

If the holiday period usually feels tight, this approach can give you steady support when you need it most.

Managing leave and public holiday requirements

Leave entitlements and public holiday rates often cause the most confusion at this time of year. Each award and agreement has specific requirements, and these rules do not pause because your business is short on time.

Holiday payroll outsourcing gives you accurate calculations for annual leave, public holiday pay, and any additional entitlements that apply. When you engage First Class Accounts Ovens & Murray, you gain a payroll process that remains accurate and consistent throughout the holiday period. Your team is paid correctly, and you avoid unnecessary rework or follow-up.

If you are unsure whether your current process handles these rules correctly, we can review it and guide you through the steps needed to stay compliant.

Keeping payroll running when your staff take holidays

Many businesses run with smaller teams in December and January. When the person who usually manages payroll is away, the risk of delays increases, even if the workload itself stays the same.

Using First Class Accounts Ovens & Murray for holiday payroll outsourcing ensures your pay runs continue without interruption. Our contracted service model means payroll is completed on time regardless of internal leave or unexpected changes. This helps you avoid late payments and protects the trust your employees place in your business.

If maintaining continuity is difficult during this period, outsourcing removes that pressure.

Reducing the administrative load at a busy time

The weeks leading into the holidays often involve tight deadlines, higher customer demand, and a shift in focus towards closing out the year. Administrative tasks can easily build up, and payroll is not something that can be pushed aside.

Holiday payroll outsourcing gives you time back by removing repetitive processing and manual checks. First Class Accounts Ovens & Murray handles the detail, so you can concentrate on operational needs or take some genuine time away.

If you often reach December feeling stretched, this support can make a noticeable difference to how you manage the season.

Staying compliant with year end obligations

Payroll compliance does not ease up at the end of the year. Entitlement rules, reporting requirements and award updates continue as normal. Mistakes made in December often carry over into the new year, making them harder to correct.

Holiday payroll outsourcing helps you avoid this. First Class Accounts Ovens & Murray keeps your payroll aligned with the rules, checks updates that apply to your employees, and ensures your records remain accurate. This steady approach lowers the risk of penalties or follow-up from the ATO.

If you are concerned about compliance during a busy period, outsourcing provides the structure needed to stay on track.

Giving yourself space to focus on your business

When you remove the weekly or fortnightly payroll cycle from your list during the holidays, you free up time for work that cannot be delegated as easily. You might use that time to serve customers, review year end results, prepare for the new year, or take a break from the daily routine.

Holiday payroll outsourcing allows you to do this without leaving any gaps in the process. First Class Accounts Ovens & Murray keeps payroll moving while you concentrate on what matters most to you and your business.

If you want clearer headspace during December and January, this can be an effective way to achieve it.

How First Class Accounts Ovens & Murray supports your payroll

Our payroll service is built to provide consistency, accuracy, and clear information. During the holiday period, these strengths become even more valuable.

What you can expect:

• Correct pay runs completed on time

• Accurate leave and public holiday calculations

• Continuity when your staff are away

• Compliance with awards, entitlements, and ATO rules

• A reliable process supported by a contracted service model

If payroll feels harder to manage at this time of year, we can take care of it for you.

Planning ahead for a smoother holiday period

Holiday payroll outsourcing is not only about reducing pressure. It helps you build a reliable process that continues to support your business into the new year. If you want to avoid payroll delays, reduce errors, and maintain compliance, December and January are ideal months to put stronger systems in place.

First Class Accounts Ovens & Murray can help you review your current process, identify gaps, and set up a structure that works all year round.

If you would like support, we are ready to assist. You can contact us to discuss how holiday payroll outsourcing can help your business stay on track during the busiest period of the year.

Frequently asked questions

How early should I organise holiday payroll outsourcing?
It is best to arrange support before staff begin taking leave or changing rosters. This gives time to review awards, confirm pay cycles, and set up any adjustments for public holidays. First Class Accounts Ovens & Murray can step in quickly, but early planning ensures a smooth transition.

Can I outsource payroll for the holiday season only?
Yes. Some businesses prefer seasonal support, while others continue with outsourced payroll all year. First Class Accounts Ovens & Murray can manage your pay runs for the holiday period or provide ongoing services if you want long term consistency.

What information do I need to provide to get started?
At a minimum, you will need current employee details, award or agreement information, leave balances, pay rates, and your preferred pay cycle. If any of this needs updating, we can help you correct and organise the records before processing begins.