Disclaimer: This guide contains wage and compliance information current as of August 2026. The Fair Work Commission adjusts minimum wage rates annually, typically effective from 1 July. Award rates, penalty percentages, and allowances vary by industry and classification. Verify current rates for your specific award using the Fair Work Ombudsman's Pay and Conditions Tool before calculating wages.
From the first full pay period on or after 1 July 2026, the national minimum wage is $26.44 per hour, or $1,004.90 per week for a full-time employee working 38 ordinary hours. It is the first time the national minimum wage has passed $1,000 a week. Modern award minimum rates rose 4.75% at the same time, lifting pay for around 2.8 million award-reliant workers, about 21.1% of the workforce.
Getting wage calculations wrong now carries more risk than ever. Since 1 January 2025, intentional underpayment is a criminal offence, and honest mistakes still mean back-payments, superannuation top-ups, and potential civil penalties. And the wage rate itself is only the starting point: our employee cost calculator shows what an employee actually costs once super, leave, workers comp, and payroll tax are added.
This guide covers the 2026-27 rates, how they apply to different employee types, and what employers must do to stay compliant.
Published: August 2026
The national minimum wage is the baseline rate set by the Fair Work Commission for employees not covered by a modern award or enterprise agreement. Following the Annual Wage Review 2026, the rate from 1 July 2026 is $26.44 per hour ($1,004.90 per week), a 5.97% increase on the previous rate of $24.95.
This rate applies to permanent employees aged 21 and over who are award-free, agreement-free, and not in training arrangements like apprenticeships. It is the absolute floor, not the rate most employees receive. Modern awards set higher minimums for specific industries and occupations, and award rates override the national minimum wage for covered employees.
The Commission reviews minimum wages annually, announcing the decision in early June with effect from the first full pay period starting on or after 1 July. The 2026 decision gave the national minimum wage a larger increase (6%) than award rates (4.75%), a deliberate move to close the gap for the lowest-paid.
Most Australian employees work under a modern award: industry or occupation-based minimum standards covering pay rates, penalty rates, allowances, and conditions. Common examples include the General Retail Industry Award, Clerks Private Sector Award, Restaurant Industry Award, Manufacturing and Associated Industries Award, and Building and Construction General On-site Award.
All modern award minimum rates increased 4.75% from 1 July 2026. Specific rates vary significantly by classification level, so check the current pay guide for your award rather than relying on general figures. The Fair Work Ombudsman's Pay and Conditions Tool and award finder identify the applicable award based on your business type and the work performed.
The 2026 decision also began a structural change: the Commission is phasing out the C13 classification, the lowest classification level across the award system, lifting rates for roughly 100,000 of the lowest-paid workers. If you have employees on entry-level classifications, check whether their classification and rate have moved.
Many awards have layered classification structures. A retail employee might sit at Level 1 with basic duties, Level 2 with added responsibility, and Level 3 with supervisory tasks, each with its own minimum rate. Classify employees on their actual duties, not their job title, and pay the corresponding rate. If an award covers the work, you must pay the award rate. The national minimum wage applies only to the small minority of genuinely award-free employees.
Casual employees receive a 25% loading on top of the permanent rate for the same work. The loading compensates for the entitlements casuals do not receive: paid annual leave, personal leave, and public holiday pay, along with the insecurity of no guaranteed hours.
The calculation: take the permanent hourly rate and multiply by 1.25. An award-free adult casual on the national minimum wage earns $26.44 x 1.25 = $33.05 per hour.
Casual loading and penalty rates are not the same thing, and both can apply at once. A casual working Sunday might receive their casual rate plus the Sunday penalty. How the two interact varies: some awards apply the penalty to the permanent rate, others compound it on the loaded rate. Check the casual provisions in your specific award, because getting this interaction wrong is one of the most common underpayment causes.
Also watch casual conversion. Employees working regular and systematic hours may have rights to convert to permanent employment after a qualifying period, even if hired as casual.
Award-free employees under 21 are paid a percentage of the adult national minimum wage:
These percentages apply only to award-free juniors. Modern awards set their own junior scales with different age bands and percentages, and some awards apply adult rates from 18 or younger. Always check the junior provisions in the applicable award.
For casual juniors, apply the junior percentage first, then the casual loading. A 17-year-old award-free casual: 57.8% of $26.44 is about $15.28, plus 25% loading gives about $19.10 per hour. Verify the exact figure in the Fair Work Ombudsman's Pay and Conditions Tool, as official rounding can differ by a cent.
One change to plan for: the Commission has decided to begin phasing out junior rates for 18 to 20 year olds under the retail, fast food, and pharmacy awards from December 2026, stepped over four years. If you employ juniors in those industries, this will lift your wage costs progressively, so build it into your forecasts now.
Apprentices are paid a percentage of the relevant tradesperson rate, increasing with each year of the apprenticeship. The percentage depends on the apprentice's age at commencement, the year of the apprenticeship, and the specific trade. As an indication, some trades start around 55% of the qualified rate in first year and step up towards 95% in fourth year, but the scales vary dramatically between awards. The Building and Construction Award, for example, runs separate tables depending on whether the apprentice commenced under or over 21.
Trainees follow the National Training Wage schedule, with rates based on the AQF level of the qualification, the year of training, and whether the trainee has completed year 12.
Do not rely on general guidance here. Pull the actual wage table from the specific award covering the trade or occupation, updated for the 4.75% increase.
Penalty rates compensate for work at unsociable times. Indicative ranges only, as every award has its own table:
Casuals may receive different penalty rates than permanents. Some awards reduce penalties for casuals on the basis the loading already provides a premium; others apply full penalties on top of the loading. Check your award.
Two traps worth calling out. First, you cannot average hours across pay periods to avoid overtime unless the award expressly permits an averaging arrangement. An employee working 45 hours one week and 30 the next triggers overtime in the 45-hour week even though the average sits below 38. Second, allowances (tool, uniform, first aid, travel, and others) are set amounts payable in addition to the base wage whenever the circumstances apply. They cannot be rolled into an hourly rate without a properly documented agreement that leaves the employee better off overall.
Employers must keep employee records for seven years: employment type and start date, hours worked including overtime, penalty rates and allowances paid, gross and net pay, superannuation contributions, and leave accrued and taken. Pay slips must be issued within one working day of payday and show the pay period, gross and net pay, deductions, super, and the employer's ABN. Leave administration has its own traps, particularly around parental leave; see our guide to parental leave administration for employers.
Incomplete records can attract penalties even where you paid correctly, because you cannot prove compliance without documentation. In an underpayment dispute, poor records can also reverse the burden of proof onto the employer.
The stakes changed on 1 January 2025. Intentional underpayment of wages or entitlements is now a criminal offence, including superannuation. Individuals, including directors and managers complicit in the underpayment, face up to 10 years imprisonment and fines of up to three times the underpayment, with corporate fines running higher again. Honest mistakes are excluded, and small businesses with fewer than 15 employees that comply with the Voluntary Small Business Wage Compliance Code cannot be referred for criminal prosecution by the Fair Work Ombudsman. Downloading and implementing the Ombudsman's guide to paying employees correctly is the cheapest insurance available.
The most common mistakes that trigger underpayment findings: misclassifying employees as contractors, applying the wrong award, paying flat rates that do not cover penalties and overtime for the actual roster, missing the July rate increase, rolling allowances into base rates without documentation, assuming junior rates without verifying date of birth, and miscalculating the casual loading and penalty interaction. If your payroll sits with someone who cannot explain how your award works, that is a risk, not a saving. Structured payroll and HR support exists precisely to close these gaps.
The Fair Work Commission conducts the review each year, weighing inflation, living standards, business conditions, and employment. The 2026 decision was announced on 2 June 2026, with the Commission citing accelerated inflation as the reason award-reliant workers needed a rise above it.
New rates apply from the first full pay period starting on or after 1 July. If your fortnightly pay period ran 29 June to 12 July 2026, the old rates applied for that entire period, and the new rates started from the period beginning 13 July. Delaying implementation creates underpayment liability from the effective date regardless of when you actually adjust pays, and employees can claim the difference.
Quality payroll software automates award interpretation, penalty calculations, and super, and updates rates when Commission decisions take effect. Common Australian platforms include Employment Hero (including Employment Hero Payroll, formerly KeyPay, with strong award interpretation and STP Phase 2 compliance), Deputy for rostering and time capture feeding payroll, and Xero Payroll for simpler award situations. Expect from roughly $5 to $10 per employee per month for basic tiers, more for advanced award engines.
Software is only as good as its configuration. Select the wrong award or classification at setup and the system will calculate the wrong pay with perfect consistency. Someone with award knowledge should review outputs regularly and spot-check individual pays against manual calculations. For more free resources, see our finance and HR tools for Australian businesses.
Many businesses outsource payroll to get award expertise without an in-house hire. A professional service handles pay runs, award interpretation, STP reporting, super, record-keeping for the seven-year statutory period, and support if an underpayment surfaces, including back-payment calculations and dealing with the Fair Work Ombudsman.
Market pricing is indicative only: basic processing for a sub-10-employee business might run $100 to $300 per month, while full compliance services with award interpretation and ongoing monitoring typically sit from $300 to $1,000+ depending on complexity. For businesses juggling multiple classifications, juniors, casuals, and penalty scenarios, an managed payroll for minimum wage usually costs less than one underpayment remediation. Our outsourced finance and HR pricing shows what a complete function costs by business stage.
What is the minimum wage in Australia in 2026?
From the first full pay period on or after 1 July 2026, the national minimum wage is $26.44 per hour, or $1,004.90 per week for a 38-hour week. Most employees are covered by a modern award with higher minimums, which increased 4.75% at the same time.
Do I need to pay the national minimum wage or the award rate?
If a modern award covers the work, you must pay the award rate for the classification. The national minimum wage applies only to the minority of employees not covered by any award. Use the Fair Work Ombudsman's award finder to confirm coverage.
Can I pay a salary instead of hourly rates?
Yes, but the salary must exceed what the employee would earn under the award for their actual working pattern, including penalties and overtime. Run the comparison at least annually and after each July increase. Award-covered salaried staff do not lose penalty entitlements just because they are salaried.
How do I calculate casual loading on penalty rates?
It depends on the award. Some apply the penalty to the permanent rate with the 25% loading added separately; others compound. Check the casual provisions in your award, as this interaction is a frequent underpayment source.
Is underpaying staff a criminal offence?
Intentional underpayment has been a criminal offence since 1 January 2025, carrying up to 10 years imprisonment for individuals and fines of up to three times the underpayment. Honest mistakes are not criminal, and small businesses that follow the Voluntary Small Business Wage Compliance Code cannot be referred for criminal prosecution, but civil penalties and back-payment obligations still apply.
What happens if I accidentally underpay an employee?
Back-pay the full amount plus superannuation on it, document how the error occurred, and fix the cause. Self-reporting to the Fair Work Ombudsman generally produces a better outcome than waiting for a complaint or audit.
How often do minimum wage rates change?
Annually. The Commission announces its decision in early June with effect from the first full pay period on or after 1 July. Individual awards can also be varied at other times, as with the C13 phase-out and the junior rates changes starting December 2026.
What if an employee agrees to work for below award rates?
The agreement is unenforceable. Award minimums cannot be contracted out of, the employee can later claim full entitlements, and you remain exposed to penalties despite the agreement.
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We review and check this guide periodically. At the time of writing (August 2026), all information was current. Scale Suite is a registered BAS Agent, not a licensed tax advisor or financial advisor. This content is general information only and does not constitute professional tax, financial, or legal advice. Some details may change over time.
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Scale Suite is a Sydney-based provider of outsourced finance and HR services for Australian SMEs. We deliver bookkeeping, financial reporting, payroll processing, fractional CFO support, recruitment, employee onboarding, people and culture support, and fractional HR oversight, all as a fully embedded team that works inside your business.
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