Annual Minimum Wage Increases for Australian Small Businesses

Every year, the Fair Work Commission (FWC) reviews and announces changes to the national minimum wage. For small business owners, staying across Australia’s minimum wage annual increases isn’t just about avoiding penalties - it’s about running a fair, sustainable workplace where your team feels valued and you’re confident you’re doing the right thing.

In this guide, we’ll explain how and when the annual increase happens, who it applies to, and the practical steps to update your payroll smoothly. We’ll also cover what to do if you’ve missed an increase, and the other wage-related obligations that typically go hand-in-hand with the minimum wage review.

If you’re looking for clear, plain-English guidance tailored to Australian small businesses, you’re in the right place.

What Is Australia’s Minimum Wage And Who Does It Cover?

The national minimum wage is the lowest legal hourly rate you can pay most employees in Australia. As of 1 July 2024, the national minimum wage is $24.10 per hour (or $915.90 per 38-hour week before tax). This base rate is reviewed annually and can change each financial year following the FWC’s decision.

However, many employees are covered by a modern award, which sets industry or occupation-specific minimums (often higher than the national minimum). If your team is covered by an award or an enterprise agreement, you’ll need to pay at least those minimum rates (including any loadings, allowances and penalty rates that apply).

Not sure which rates apply? Use the Fair Work tools to check current rates for your roles, including the Fair Work pay calculator, and confirm whether each employee is award-covered or award-free. If someone is truly award-free, the national minimum wage is your baseline.

A few roles (for example, apprentices and trainees) have separate minimums under their relevant award or training arrangement. If you’re unsure which instrument applies, it’s wise to get tailored advice from an employment lawyer.

How The Annual Wage Review Works (And When Rates Change)

The national minimum wage and all modern award minimums are reviewed once a year through the FWC’s Annual Wage Review. Here’s what to expect:

• Review period (May–June): The FWC considers economic conditions, inflation, productivity, and submissions from unions, employer groups and governments.
• Announcement (June): The Commission publishes its decision, setting the new national minimum and updating modern award rates.
• Start date (early July): New rates usually begin from the first full pay period on or after 1 July.
• Annual rhythm: Plan to review your payroll each June so you’re ready when the rates kick in.

Keeping this timing on your calendar means you’re not caught out mid-pay cycle. It also gives you space to update employment contracts, payroll settings and communications before the change takes effect.

Why Minimum Wage Increases Matter For Small Businesses

Yes, the annual increase is a legal obligation. But it’s also a smart business practice. Updating your pay rates on time helps you:

• Stay compliant and avoid penalties: Underpayment risks back-pay, penalties from the Fair Work Ombudsman, and time-consuming audits.
• Attract and keep good people: Paying lawfully (and competitively) supports retention and reduces recruitment costs.
• Build a positive culture: Fair pay improves morale and productivity - and reduces disputes.
• Protect your brand: Doing the right thing strengthens trust with customers, partners and your community.

Being proactive also saves you money in the long run. Fixing underpayments after the fact often costs more than getting it right from the start.

Step-By-Step: Preparing Your Payroll For 1 July

With a simple checklist, you can implement changes confidently and on time.

1) Mark Your Calendar

Set reminders in May and June to track the FWC’s announcement and to schedule your internal payroll update before the first full pay period in July. If you outsource payroll, make sure your bookkeeper or accountant has the dates too.

2) Confirm The Right Rates For Each Role

Identify whether each employee is award-covered or award-free, then confirm the correct minimums, loadings and penalty rates. The Fair Work pay calculator is a practical way to cross-check new award rates.

3) Review Employment Contracts

Employment contracts should reflect current base rates, classifications, allowances and penalty structures. After the annual increase, consider whether you need to issue a variation letter or an updated Employment Contract - particularly if you pay “above award” and want to ensure the base rate still clears the new minimum with appropriate buffers.

This review is also a good time to check other terms, like overtime rules, set-off clauses and leave provisions, to ensure they align with your award and current law.

4) Communicate With Your Team

Let staff know when the new rates will apply and how they’ll appear on their payslips. Clear, written updates (even a short email) build trust and reduce confusion.

5) Update Payroll Systems And Payslips

Adjust your payroll software so new rates apply from the first full pay period after 1 July. Ensure payslips break down ordinary hours, loadings, allowances and overtime separately, as required by law. If you operate with internal rules for rostering, phones or overtime approval, keep your workplace policies consistent with any pay-related changes.

6) Keep Accurate Records

You must keep time and wages records (and issue payslips) that meet the Fair Work Regulations. Maintain records for at least seven years - they’re essential if you ever need to show you’ve complied with the annual increase.

Don’t Forget Superannuation And Leave

Minimum wage compliance sits alongside other obligations.

• Superannuation: Pay super at the current Super Guarantee rate on eligible Ordinary Time Earnings (OTE). As a rule, OTE generally excludes overtime; for a refresher on what’s included, see Ordinary Time Earnings.
• Leave: Make sure annual leave, personal/carer’s leave and other entitlements are correctly accrued and paid. If you employ part-time staff, double-check entitlements against your award and Fair Work guidance - our overview of annual leave entitlements for part-time employees is a helpful starting point.
• Penalty rates and allowances: Award-covered employees may be entitled to penalty rates (weekends, public holidays, evenings) and allowances (e.g. uniform, travel). Update these alongside the base rate each year.

If You Miss An Increase: What To Do Next

Mistakes happen. If you’ve discovered you paid below the new minimum after 1 July, act quickly and transparently.

• Calculate back-pay: Work out the shortfall for each affected employee and pay it promptly (including any applicable loadings and penalty rates).
• Explain the fix: Communicate with staff about what happened, what’s being done, and when the back-pay will land.
• Update your systems: Correct payroll settings so the issue doesn’t recur in the next pay cycle.
• Document your steps: Keep records of calculations, communications and payment confirmations. These will help if there’s a query from the Fair Work Ombudsman.

If the error is complex - for example, it spans multiple years or involves award interpretation - getting advice from an employment lawyer can help resolve things efficiently and reduce your risk.

Key Takeaways

• Minimum wage and award rates are reviewed annually by the Fair Work Commission and generally apply from the first full pay period on or after 1 July.
• Confirm whether your employees are award-covered or award-free, then update base rates, loadings and penalty rates accordingly using tools like the Fair Work pay calculator.
• Review and update your Employment Contracts, payslips, payroll systems and workplace policies so they reflect the new rates and remain consistent with your award.
• Pay super on eligible Ordinary Time Earnings at the current rate (noting that OTE generally excludes overtime) and keep accurate time and wage records for seven years; our primer on OTE can help.
• If you miss an increase, calculate and pay any shortfalls promptly, communicate with staff, fix your systems, and keep evidence of your corrective steps.
• Leave entitlements, penalty rates and allowances continue to apply alongside base pay. If you employ part-time staff, check annual leave entitlements and ensure you’re meeting award requirements.
• If you’re unsure about award coverage, complex calculations or contract updates, speaking with an employment lawyer early can save time, money and stress.

If you would like a consultation on managing your small business’s compliance with Australia’s minimum wage annual increases, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.