Minimum wages will be increased by 3.5% from 1 July 2025
Each financial year, an Expert Panel of the Fair Work Commission reviews and sets minimum wages for employees. The Expert Panel has today handed down its 2025 Annual Wage Review decision.
Here are the details you need to know.
What does the Expert Panel review?
The Expert Panel:
1. reviews and makes the National Minimum Wage order (which applies to employees who are not covered by a Modern Award or Enterprise Agreement); and
2. reviews the minimum wage rates prescribed by Modern Awards and consider whether they should be adjusted.
What decision has been made?
The Expert Panel has made the decision to increase the National Minimum Wage and all Modern Award minimum wage rates by 3.5%.
This means that the National Minimum Wage will now be $24.95 per hour or $948.00 per week. Previously this was $24.10 per hour or $915.90 per week.
The Modern Awards including the varied wage rates will be published in due course.
What were the reasons behind this decision?
The primary consideration of the Expert Panel was the fact that since July 2021, employees who rely on minimum wages have “suffered a reduction in the real value of their wage rates” as a result of the “spike in inflation which commenced in 2021 and peaked in late 2022”.
For example, “the benchmark C10 award rate of pay has declined by 4.5 percentage points relative to inflation as measured by the Consumer Price Index”.
The continuation of what the Expert Panel referred to as an “inflationary episode” has meant that, over the last three Annual Wage Review decisions, the Expert Panel has repeatedly held off taking any action to reverse this reduction because of concerns this might result in the persistence of higher inflation.
As the inflationary episode is now considered to be over, that provided an opportunity for the Expert Panel to move towards correcting what has happened over the last four years by awarding a “real increase” while avoiding:
• embedding the loss in the real value of wages which has occurred; and
• entrenching a reduction in living standards for the lowest paid in the community.
The Expert Panel took into account moderating factors, including the upcoming increase in the Superannuation Guarantee rate and the uncertainty due to changing US trade policies.
The Expert Panel was satisfied the decision is sustainable.
When will the increases take effect?
The increases will take effect from the first pay period on or after 1 July 2025.
What do employers need to do?
To avoid an underpayment, employers will need to ensure that their employees covered by Modern Awards are paid at least the minimum wage in their Modern Award, even if an enterprise agreement applies to them. Employees who are not covered by a Modern Award or enterprise agreement, must be paid at least the National Minimum Wage.
Where can I read more?
You can read the announcement made by the Expert Panel this morning here.
You can also read the decision (which provides more details of the reasons for the decision) here.
Contact Us
If you are unsure how the wage increases may affect your business and want to ensure you are paying your employees correctly, please get in touch with our experienced employment and industrial relations team.