Minimum Wage Changes Are Now in Effect

The Fair Work Commission’s Annual Wage Review decision has now taken effect, and if you think it only impacts payroll, it may be time to take a closer look.

Each year, the Annual Wage Review creates a ripple effect across Australian businesses, influencing everything from base rates and overtime to leave liabilities, superannuation, workforce structure and compliance risk.

Now that the new financial year has commenced, employers should be reviewing their arrangements to ensure they remain compliant under the updated minimum wage and Award rates.

Know Who the Increase Actually Affects. It’s Not Just Award Employees!

One of the most common misconceptions following a wage increase is that only businesses paying Award rates need to take action. That is not the full picture.

If you pay above Award rates or annual salaries, the increase may have reduced the buffer between what you are paying and the new Award minimums.

Employers should now review whether:

• Above-Award rates still sit comfortably above the new minimums
• Annual salaries continue to satisfy Award obligations and the Better Off Overall Test
• Employment contracts and remuneration arrangements remain compliant
• Employee classifications accurately reflect the duties being performed

Misclassification and underpayment remain among the most common and costly compliance issues facing Australian employers. A proactive review now can help identify issues before they become bigger problems later.

Labour Costs May Have Increased Beyond Base Pay

The headline wage increase is only part of the picture. For many businesses, the true financial impact flows through several cost lines at once.

Employers should consider the impact on:

• Overtime and penalty rates
• Allowances
• Leave liabilities, including annual leave and personal leave accruals
• Superannuation contributions
• Workers’ compensation premiums
• Payroll tax obligations

For businesses with larger or growing workforces, even a modest wage increase can compound quickly. Understanding the full cost impact now can support smarter decisions around staffing, budgeting and operational planning for FY2026–27.

Use This Moment to Ask If Your Workforce Structure Still Fit for Purpose?

The start of a new financial year is a valuable opportunity to step back and assess whether your workforce arrangements still reflect how your business actually operates.

Key areas to revisit include:

• Employee classifications — do they match current duties?
• Employment contracts — are they current, clear and legally sound?
• Salary arrangements — do they remain compliant after the wage increase?
• Position descriptions — do they reflect what employees are actually doing?

It is common for employees to gradually absorb new responsibilities over time without any formal update to their classification, position description or remuneration.

Left unchecked, this can create both compliance risk and employee relations risk.

Now Is the Time to Review

With the new minimum wage and Award rates now in effect, employers should not assume their current arrangements are still compliant.

Taking the time to review employment contracts, employee classifications, salary arrangements and workforce structures can help reduce risk, improve clarity and support better workforce planning.

For tailored HR support, contact PerformHR today on 1300 406 005 or email info@performhr.com.au.

Together, we can help create a more compliant, efficient and productive workplace that empowers your team to perform at their best.