Minimum Wage to Increase by 3.5% from 1 July 2025: What Employers & Employees Need to Know

In a much-anticipated announcement, the Fair Work Commission has confirmed a 3.5% increase to the National Minimum Wage (NMW) and modern award minimum wages, effective from the first full pay period on or after 1 July 2025.

This update is part of the Commission’s 2024-25 Annual Wage Review and will impact millions of workers across Australia.

New Minimum Wage Rates from 1 July

From 1 July 2025, the National Minimum Wage will rise to:

• $24.95 per hour (up from $24.10), or
• $948.00 per week based on a standard 38-hour week.

These changes apply to employees not covered by a modern award or enterprise agreement. A 3.5% increase will also apply to the minimum award rates for those covered by modern awards.

The new rates will take effect from the start of an employee’s first full pay period on or after 1 July. For example, if your pay week starts on a Thursday, the updated rates would begin on Thursday 3 July 2025.

Why the Increase?

The Fair Work Commission cited multiple economic factors in reaching its decision. Chief among them was the ongoing decline in the real value of wages due to inflationary pressures since 2021. Despite previous increases, 5.75% in 2023 and a record-setting 8.6% lift to the NMW in 2022, the Commission noted that low-paid workers have continued to feel the pinch as living costs outpaced wage growth.

With inflation stabilising within the Reserve Bank’s target range of 2-3%, the Commission saw an opportunity to partially restore the real value of minimum wages without risking further inflationary effects.

Other Influencing Factors

The decision also took into account:

• The upcoming superannuation guarantee increase to 12% from 1 July 2025.
• A challenging outlook for certain sectors, notably accommodation and food services, which employ a high number of award-reliant workers.
• Broader economic indicators, including solid employment growth and historically high labour force participation rates.

While business groups raised concerns about stagnant productivity levels, the Commission deemed a moderate increase necessary and sustainable given current economic conditions.

Employer Responsibilities

Employers must ensure they implement the new minimum rates correctly and on time. Non-compliance may result in underpayments and potential breaches of the Fair Work Act 2009, particularly under sections 45 and 50, which relate to contraventions of modern awards and enterprise agreements.

Employers are also encouraged to:

• Review their current pay structures.
• Update payroll systems in advance of the change.
• Ensure compliance with the new wage rates and the upcoming increase to superannuation contributions.

Special Note for Enterprise Agreements & Awards

If an enterprise agreement covers an employee, it must at least meet the base pay rate of the relevant modern award. Where it falls short, the higher modern award rate prevails.

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This wage adjustment underscores the ongoing balancing act between economic stability and fair pay. For employees, it offers a modest lift in earnings when living expenses remain a key concern. For employers, it’s a timely reminder to stay vigilant with payroll obligations to avoid compliance issues.

If you’re unsure how these changes affect your workplace, contact Bambrick Legal today. We offer a free, no-obligation 30-min consultation for all enquiries.

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