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National Minimum Wage Increase – Time to Review Your Payroll?

From 1 July 2025, the National Minimum Wage and award minimum wages will increase by 3.5%. That means the new base rate for employees not covered by an award or enterprise agreement will increase to $948 per week or $24.95 per hour. At the same time, award minimums will also rise by 3.5%, affecting many employees across various industries.

This annual change is part of the Fair Work Commission’s ongoing efforts to ensure wages keep pace with inflation and cost-of-living pressures. For Australian small business owners, especially those with tight payroll budgets, now is the time to review pay rates and ensure compliance. The increase applies from the first full pay period on or after 1 July 2025. Here’s a detailed look at what’s changing, what to look out for, and how to prepare your business for the changes.

Minimum Wage Increase – Check Your Award Minimums

Most employees in Australia are covered by an industry award, which sets the legal minimums for wages, conditions, and allowances. While the increase to the National Minimum Wage grabs headlines, it’s these award rates that matter day-to-day for many businesses.

A 3.5% increase to award minimums means your payroll software or processes may need a refresh. If you’re unsure which award applies to your staff, the Fair Work Ombudsman’s Pay and Conditions Tool is a useful resource. Even if you already pay above-award rates, it’s essential to check that any built-in entitlements or above-award benefits still meet the minimum legal thresholds after 1 July.

Super Guarantee Rises to 12% from 1 July

Alongside wage increases, the Superannuation Guarantee (SG) will also climb – from 11.5% to 12% of ordinary time earnings, effective 1 July 2025. This increase represents the final stage of planned SG hikes legislated by the federal government. As a business owner, you must ensure your payroll system is configured to apply the 12% rate from Q1 of the 2025–26 financial year (1 July – 30 September 2025).

Failing to do so can result in Super Guarantee Charges (SGCs), interest penalties, and administrative fees – all avoidable with proactive planning.

Enterprise Agreements: Don’t Let Them Fall Behind

Even if your employees are covered under an enterprise agreement (EA), you’re not off the hook. The base pay rate in any EA must not fall below the relevant award minimum. That means if the new award rate exceeds your EA rate, you’ll need to make up the difference.

Review your EAs now and assess whether adjustments are needed. This is also a great opportunity to engage employees and union reps, ensuring transparency and fairness across your organisation.

Payroll Compliance: Where to Focus

Considering the changes to wages and super, your payroll checklist for FY2025–26 should include:

• Confirm which award applies to each employee
• Cross-check current pay rates with new award minimums
• Update employment contracts if necessary
• Adjust super contributions to 12%
• Review salary packaging and bonus arrangements
• Test your payroll system before the first July pay run
• Communicate changes clearly to staff

Taking a proactive approach minimises risk, ensures compliance, and strengthens employee trust – all vital in today’s tight labour market.

Using Expert Help to Stay Compliant

Keeping up with wage legislation, award changes, and superannuation compliance is an ongoing burden for small businesses. That’s where the McKinley Plowman CFO2GO team can help.

Our SME Business Specialists work alongside you to simplify payroll processes, identify compliance gaps, and implement efficient systems tailored to your industry. Whether you’re a retailer navigating award complexities, a tech startup with contractors, or a family business adjusting to new SG rates – we’ve got the experience and tools to support you.

Final Thoughts: Small Adjustments, Big Impact

Wage and super changes might seem minor on paper, but they can have a big impact on your cash flow, reporting, and team satisfaction. Ignoring them risks more than just fines – it can affect your reputation, staff morale, and business sustainability.

The 1 July 2025 deadline is fast approaching. If you’re unsure where to begin, start with a quick payroll audit. Better yet, book a consultation with our CFO2GO team to ensure you’re ticking all the boxes before the first pay run. If you need support, please reach out to the CFO2GO team on (08) 9301 2200 or visit mckinleyplowman.com.au/contact-us.

Further Reading:

• Minimum wages increase 3.5% from 1 July 2025 – Fair Work Ombudsman

• Minimum wages – Fair Work Ombudsman

• Pay guides – Fair Work Ombudsman

• Super guarantee | Australian Taxation Office

Please note the information provided within this article is general in nature. Prior to considering strategies discussed in this article, we recommend you seek professional advice specific to your business and its needs. Please be aware that, without the benefit of personalised business advice, you may be committing yourself to strategies that are not appropriate for your business’ situation, needs and objectives.

written by:

Claire Ginbey

Heading up our CFO2GO team, Claire's skills as a SME Business Specialist and cloud accounting specialist have developed in line with advancements in technology and best practice; allowing her to maintain the highest service standards for clients.

Claire's passion for growing small businesses and helping them achieve sustained success is what motivates her to continuously develop her skills and knowledge. Her clients appreciate her considered and dedicated approach to working with them, and her personal oversight across their operations and financial performance.