The Fair Work Commission announced the Annual Wage Review and outlined the new minimum wage will increase by 3.5 per cent from 1 July 2025.
The decision will directly affect the pay packets of over 2.6 million Australians (approximately 1 in 4 workers), who receive either the minimum wage or an award wage.
If you run an Australian business, it pays to understand the changes to the minimum wage. Beneath is a simple breakdown of the latest information and some practical steps you can take in response to the new minimum wage.
What are the new minimum wage rates?
The Fair Work Commission (FWC) announced a 3.5% increase to the National Minimum Wage (NMW), an increase from $24.10 per hour to $24.95 per hour, equating to $948.00 per week. The changes came into effect from the first full pay period on or after 1 July 2025.
The National Minimum Wage applies to employees not covered by a modern award or registered agreement. The National Minimum Wage is a minimum pay rate as legislated by the Fair Work Act (2009), which is reviewed and updated each year.
The minimum wage increase also affects other payments such as penalty rates, overtime, allowances and more.
Will the minimum wage impact modern award wages?
Yes. The Annual Wage Review also covers modern award minimum wages. Modern award minimum wages increased by 3.5 per cent, with the changes also coming into effect from 1 July 2025.
How is the minimum wage decided?
The minimum wage is set by the Fair Work Commission’s Expert Panel. Each year the panel reviews the current minimum wage and issues a revision. The panel take into account a number of factors including inflation, the performance and competitiveness of the national economy, the need to achieve gender equality, promoting social inclusion through increased workforce participation, relative living standards and the needs of low paid employees.
The panel is made up of seven people, including a President, three full-time members, and three part-time members. The members of the panel are chosen for their expertise in workplace relations, economics, commerce, and social policy.
The Fair Work Act (2009) entitles individuals, businesses, and other organisations to submit formal requests to be considered before the panel sets a new minimum wage. The Act also demands research conducted by the panel is published, ensuring transparency on how important minimum wage decisions are made.
What the minimum wage increase means for small businesses
Offering a different perspective, The Council of Small Business Organisations Australia said to the 3.5 per cent increase, which is above the current inflation rate, places even more pressure on small businesses already facing increased financial challenges.
SMEs are continuing to struggle with growing costs and maintain thin profit margins. Energy prices, rent, insurance, borrowing costs, plus an increase in the superannuation guarantee, and payroll tax, are all adding further financial burdens.
Many SME owners have voiced a concern the minimum wage increase could ultimately lead to passing some of the costs on to customers and, unfortunately, business closures.
What should your business do?
If you’re unsure about the implications of the new minimum wage for your business, Peninsula can give you the practical advice needed to successfully navigate the changes:
- Call our 24/7 Advice Line for free initial advice
- Check our website for the latest updates
Call us on 1300 761 935 today for more information about how Peninsula can help your business meet its obligations with the minimum wage increase.
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