The new rates take effect from your first full pay period starting on or after 1 July 2026. That's an important distinction. If your pay cycle starts on Wednesday 1 July, the new rates apply from that pay period. If your cycle started on Monday 29 June, the old rates still apply for that period.

Headline inflation is currently running at 4.2% annually, and the FWC acknowledged that most award-reliant workers still have lower real wages than they did in July 2021, before the post-pandemic inflation spike. The Commission said it wanted to ensure workers were "not worse off in real terms" and described the current economic environment as "particularly challenging" due to disrupted oil supplies and persistent cost-of-living pressures.

Take your employee's current base hourly rate and multiply it by 1.0475 (a 4.75% increase). For example:

Current rate: $25.50/hr New rate: $25.50 × 1.0475 = $26.71/hr

For employees on the national minimum wage (not covered by an award), the new rate is simply $26.44/hr.

Remember: the increase also flows through to penalties, overtime, allowances, and loadings that are calculated as a percentage of the base rate.

Casual employees are entitled to a 25% casual loading on top of the new base rate. So for an employee on the national minimum wage:

$26.44 × 1.25 = $33.05/hr (casual rate)

Xero does not automatically update award rates or the national minimum wage — you need to do this manually. Here's how:

1. Go to Payroll > Employees
2. Click the employee's name
3. Select the Pay Template tab
4. Under Earnings Rate, update the hourly rate or salary
5. Click Save

If you've already created a draft pay run, open the payslip, click Reset Payslip, and save again to apply the updated rate.

Pro tip: Do this before you process your first July pay run. Don't leave it to the last minute.

It can. An employee's base pay rate under an enterprise agreement cannot fall below the relevant award minimum or the national minimum wage. If the new rates push the award minimum above what your agreement pays, you'll need to top up to the higher amount.

If your employees are already paid above the new award minimums, you're not legally required to pass on the increase. However, it's worth checking that the gap between what you pay and the new award rate hasn't shrunk to the point where penalties and loadings could push the award rate past your current pay.

Underpaying employees — even unintentionally — can result in back-payment claims, penalties under the Fair Work Act, and reputational damage. The Fair Work Ombudsman actively audits and investigates underpayments. Get your payroll right from day one.

Yes — Payday Super also kicks in from 1 July 2026. Super contributions must now be paid at the same time as wages, rather than quarterly. This is a significant shift for payroll processing and cash flow planning. If you haven't already reviewed your payroll workflow, now's the time.