Minimum Wage Review: What Employers Need to Know
On 3 June 2025, the Fair Work Commission (Commission) handed down their Annual Wage Review Decision (Decision) that will affect the National Minimum Wage and modern award minimum wage rates.
Effective the first full pay period on or after 1 July 2025, the the National Minimum Wage and modern award minimum wage rates will increase by 3.5 per cent.
The rationale
The Commission’s principal consideration for its Decision was that since 2021, there has been a significant decline in the real value of modern award minimum wage rates relative to ongoing inflation as measured by the Consumer Price Index.
The Commission explained that it has repeatedly avoided taking action in relation to this decline due to concern it could contribute to this inflation continuing. It acknowledged, however, that in doing so, the “living standards for employees dependent on modern award wages have been squeezed and the low paid have experienced greater difficulty in meeting their everyday needs.”
How to prepare
In preparation for these upcoming increases, we recommend that employers review their current pay rates to ensure they are continuing to satisfy the relevant minimum entitlements.
Below are important considerations when conducting these reviews to ensure compliance and minimise risks.
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Understand which industrial instruments cover your employees and what minimum entitlements apply based on patterns of work and rosters.
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Review your current pay rates to ensure they satisfy the new award minimum rates of pay effective from 1 July 2025.
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If current pay rates continue to exceed the relevant minimum rates prescribed, an employer may be able to absorb the increase.
Where the rate of pay no longer satisfied the applicable minimum rate in light of the minimum wage increase, employers should calculate exactly how much of an increase is needed (i.e., it may not necessarily be 3.5 per cent).
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Now is an opportune time to ensure your employment contracts are up to date and provide the required protection.
That is, ensuring:
common law set off terms are robust and provide the intended protection – in the absence of a properly drafted common law set off clause, risk of non-compliance with the Award may arise;
hours of work are properly structured (such as clearly defining ordinary hours of work and structuring rosters correctly); and
remuneration terms are clear and concise (such as differentiating between base and all-inclusive/composite rates of pay, and having a separately identifiable casual loading).
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Where increases to employee rates of pay are required, consider how these changes will be communicated to the impacted employees.
How we can assist
Awards are complex. At Norfolk Workplace Consulting, our team of specialist consultants have substantial experience advising on minimum entitlements under industrial instruments, and assisting employers in structuring their pays effectively to ensure continued compliance.
We offer Better Off Overall Tests (BOOTs), pay reviews and compliance audits. Where risk is identified or where otherwise appropriate, we can arrange for these services to be provided under legal professional privilege through our sister company, Pragma Lawyers.
Where necessary, our team can also support you with effective remediation and communication strategies to help ensure any messages are received positively and reduce the risk of misunderstandings, dissatisfaction or disputes.
Our team is available to provide expert advice and practical solutions to support your business. Contact our team to find out more.