Minimum wage Australia 2026: Rates, increases and what employers must pay

Published Friday 10 July 2026

Table of contents

• What is the national minimum wage in Australia?
• When does the minimum wage increase and who sets it?
• Which pay rate applies to your employees?
• Can you pay below the minimum wage?
• What rates apply for casuals, juniors and apprentices?
• How to update payroll for new minimum wage
• Tools to stay compliant
• Simplify minimum wage payroll with Xero
• FAQs on minimum wage in Australia

Key takeaways

• Check the relevant award first because most employees are on award rates that are higher than the national minimum wage
• Apply new rates from the first full pay period on or after 1 July and plan updates ahead of time to avoid underpayment
• Calculate special categories carefully including casuals, juniors, apprentices, trainees, piecework, and supported wage arrangements
• Use reliable tools to confirm rates, update payroll once, and keep clean records to reduce admin and errors

What is the national minimum wage in Australia?

The national minimum wage in Australia is the lowest hourly rate you can legally pay an adult employee who is not covered by an award or registered agreement. As of 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. This base rate applies to award-free and agreement-free employees over 21 years of age. A separate, lower entry-level rate applies for the first six months of employment in roles aligned to the award's lowest classification: $978.10 per week or $25.74 per hour.

Most Australian employees are covered by a modern award, which sets pay rates above the national minimum. If an award applies to your employee's role, you must pay at least the award rate for their classification, not just the national minimum.

The Fair Work minimum wage is set and adjusted annually by the Fair Work Commission through the Annual Wage Review. Fair Work also publishes official pay guides and tools to help employers confirm the correct rates for their staff.

When does the minimum wage increase and who sets it?

The Fair Work minimum wage and award minimum rates are reviewed and set each year by the Fair Work Commission through the Annual Wage Review process. This independent tribunal considers economic conditions, cost of living, business competitiveness, and the needs of low-paid workers before handing down a decision, usually in June to become active on 1 July. This timing applies to the national minimum wage and to most modern award rates across Australia.

Effective date and back pay

New minimum wage increases in Australia start from the first full pay period on or after 1 July. If your pay period starts before this date but ends after it, the new rates apply from the start of the next full pay period.

If you discover you've applied the old rates after 1 July, you must calculate the shortfall for each affected employee and pay it as soon as possible. Document the underpayment, the correction, and the date it was paid, and communicate clearly with your employee about the adjustment.

Where to check official rates

Always refer to official sources to confirm the correct Australian minimum pay rate for your employees:

• The Fair Work Ombudsman minimum wages page provides current national minimum wage figures and links to pay guides.
• The Fair Work Commission publishes the Annual Wage Review decision and updated modern award pay rates each year.
• The Pay and Conditions Tool on the Fair Work Ombudsman website lets you enter a role and location to confirm coverage, base rates, loadings, penalties, and allowances.
• The Australian Bureau of Statistics Wage Price Index tracks broader wage trends across the economy.

Bookmark these resources and check them each June and July to stay on top of changes.

Which pay rate applies to your employees?

Not all employees are paid the same base rate. The pay rate that applies depends on whether your employee is covered by a modern award, an enterprise agreement, or is award-free.

If your business has negotiated an enterprise agreement that has been approved by the Fair Work Commission, the agreement sets a role’s pay and conditions. The agreement must meet the safety net, meaning pay and conditions must be at least as good as the underlying award and the National Employment Standards (NES).

If an employee is not covered by an award or agreement, you must pay them at least the national minimum wage for Australia for their hours worked. Some employees may be on individual arrangements or contracts, but these must still meet or exceed the minimum wage floor.

Awards

Modern awards are legal documents that set out award rate tables, classifications, allowances, penalty rates, and other conditions for specific industries and job types. There are over 100 modern awards covering sectors such as hospitality, retail, construction, manufacturing, and professional services.

Each award defines job classifications and pay levels based on duties, skills, and responsibilities. For example, a Level 1 retail employee has a different base rate than a Level 3 retail supervisor. Awards also set rules for casual loading, overtime, weekend and public holiday penalties, allowances for uniforms or tools, and rostering and shift arrangements.

Use the Pay and Conditions Tool or the Fair Work Ombudsman award finder to confirm which award applies to your employee and their correct classification.

Enterprise agreements

An enterprise agreement is a collective agreement negotiated between an employer and employees (often with union involvement) that sets pay and conditions for a specific workplace or group of workplaces. Once approved by the Fair Work Commission, the agreement overrides the relevant modern award.

Enterprise agreements must pass the Better Off Overall Test (BOOT), meaning employees must be better off under the agreement than they would be under the award. Pay rates, allowances, and conditions in the agreement must meet or exceed the safety net provided by the award and National Employment Standards.

If you have an enterprise agreement in place, refer to the agreement document for pay rates and update schedules, and ensure any wage increases align with the terms negotiated and approved.

Award and agreement free employees

Some employees are not covered by a modern award or enterprise agreement. This can include certain managers, professionals, and administrative staff in small businesses, depending on the nature of their role and the industry.

Award-free employees must be paid at least the national minimum wage for all ordinary hours worked. Special national minimum wages apply in some cases, such as the supported wage system for employees with disability, which allows a pro-rata rate based on assessed productivity.

If you're unsure whether an award applies to a role, use the Pay and Conditions Tool or seek advice from Fair Work or your accountant. It's safer to assume award coverage and check than to risk underpayment.

Can you pay below the minimum wage?

In most cases, no. Paying below the national minimum wage is illegal under the Fair Work Act and can result in significant penalties. There are a small number of lawful exceptions, but these are defined by law and cannot be applied at an employer's discretion.

When exceptions apply

The law recognises specific categories where a rate below the adult national minimum wage is permitted:

• Junior employees: Workers under 21 are paid a percentage of the adult rate based on their age, as set by the relevant modern award or the national minimum wage junior rates. These percentages are legal minimums, not discretionary reductions.
• Supported Wage System: Employees with a disability whose productivity is assessed as less than full capacity may be paid a pro-rata rate through the Supported Wage System (SWS), calculated as a percentage of the applicable award or minimum wage rate.
• Apprentices and trainees: Apprentice and trainee pay scales are set below the full adult rate by law, based on the year of training and the relevant award or National Training Wage.

These exceptions are not loopholes. Each has specific eligibility rules, assessment processes, and documentation requirements. Applying a reduced rate outside these categories is classed as underpayment.

Consequences of underpayment

Paying below the minimum wage, even unintentionally, carries real risks. The Fair Work Ombudsman can investigate complaints, issue compliance notices, and pursue civil penalties. Under the Voluntary Small Business Wage Compliance Code, small businesses that self-identify and proactively correct underpayments may reduce their exposure to penalties, but this requires prompt action and full repayment.

If you discover an underpayment:

1. Calculate the shortfall for each affected employee across the full period of underpayment.
2. Pay the outstanding amount as soon as possible.
3. Document the error, the calculation method, and the repayment date and keep records of these for at least 7 years.
4. Notify the employee in writing and keep a copy of the communication.
5. Review your payroll processes to identify and fix the root cause.

What rates apply for casuals, juniors and apprentices?

Different employee types have different pay rules under the framework for minimum wage in Australia in 2026. Apply the correct rate for each category to stay compliant and avoid underpayment.

Casual loading and base rates

Casual employees receive a loading on top of the base hourly rate to compensate for the lack of paid leave and job security. The standard casual loading is 25% of the base rate, bringing the minimum wage in Australia for a casual adult employee to $33.05 per hour as of 1 July 2026.

If a casual is covered by a modern award, the casual loading applies to the award base rate for their classification, not the national minimum. Some awards set different casual loadings, so always check the specific award or use the Pay and Conditions Tool.

Casual employees are also entitled to penalty rates and overtime under the applicable award. These penalties and overtime rates are calculated on the base rate before the casual loading is added, unless the award specifies otherwise.

Junior employees

Junior employees are workers under 21 years of age. Until December of 2026, juniors between the ages of 18 and 20 years old under certain awards will be paid a percentage of the adult rate based on their age, as set out in the relevant modern award or, if award-free, in the national minimum wage junior rates.

The national minimum wage junior rates for award-free employees are based on age. As of 1 July 2026, the percentages of the adult national minimum wage are:

• Under 16: 36.8%
• 16 years old: 47.3%
• 17 years old: 57.8%
• 18 years old: 68.3%
• 19 years old: 82.5%
• 20 years old: 97.7%

These percentages apply to award-free junior employees only. If your employee is covered by a modern award, check the junior rates in that specific award, as percentages vary. Use the Fair Work Ombudsman's Pay and Conditions Tool to confirm the correct rate for your employee's age and award coverage. Junior rates apply to both permanent and casual employees, with casual juniors receiving the percentage of the adult rate plus the casual loading.

In December 2026, the Fair Work Commission is set to start phasing out junior minimum wage rates for workers under the retail, fast-food, and pharmacy awards between the ages of 18 and 20 years old over a 4-year period.

Apprentices and trainees

Apprentices and trainees are paid based on the year or stage of their apprenticeship or traineeship, their age, and whether they hold prior qualifications. Most industries have specific apprentice and trainee pay scales set out in the relevant modern award.

For example, a first-year adult apprentice might be paid 55% of the relevant tradesperson rate, increasing each year until they reach the qualified rate upon completion. School-based apprentices and trainees have separate, lower pay scales.

If an apprentice or trainee is not covered by an award, the National Training Wage applies. This sets minimum rates based on the Australian Qualifications Framework level of the training and the year of the apprenticeship or traineeship.

Always confirm apprentice and trainee rates using the relevant award pay guide or the Pay and Conditions Tool, and review rates each July when the annual wage review takes effect.

Workers on the supported wage system

The Supported Wage System (SWS) allows employers to pay a pro-rata wage to employees with a disability whose productive capacity is assessed as less than full. The rate is calculated as a percentage of the applicable award or minimum wage, based on a formal productivity assessment conducted by an accredited assessor.

To use the SWS, you must apply through the Department of Employment and Workplace Relations and follow the prescribed assessment process. You cannot apply a reduced rate without completing this process first. The Fair Work Ombudsman's Supported Employment Services Award page explains how the award works, eligibility, the assessment process, and how to calculate the correct rate.

Piece rates and commission

Some awards and agreements allow piecework or commission-based pay arrangements, where employees are paid per task completed or as a percentage of sales rather than an hourly rate.

Even under piecework or commission arrangements, the employee's average earnings over a pay period must meet or exceed the minimum pay rate in Australia for the hours they worked. Many awards require a floor rate or guarantee, so the employee is protected if their piece rate or commission earnings fall short.

If you use piecework or commission, keep detailed records of hours worked and output or sales, and regularly check that average hourly earnings meet the minimum wage and award requirements.

Western Australia minimum wage

Western Australia has a separate state industrial relations system that covers certain private sector employees not covered by the national system. The WA Industrial Relations Commission sets a minimum wage for Western Australia and state awards for these employees.

If your business operates in WA, check whether your employees are covered by the national Fair Work system or the WA state system. Most businesses are under the national system, but some small businesses and specific industries may be covered by WA awards.

You can confirm coverage and rates through the WA Department of Mines, Industry Regulation and Safety or by seeking advice from your accountant or HR advisor.

How to update payroll for new minimum wage

When the minimum wage increase in Australia takes effect each July, you need to update your payroll system and processes to apply the new rates correctly and on time. Follow this checklist to ensure a smooth transition.

1. Confirm coverage and classifications. Map each employee to an award, agreement, or award-free status and confirm the correct classification level. Use the Pay and Conditions Tool or the relevant award pay guide to verify coverage and classification for each role.
2. Retrieve new rates. Access the Fair Work Ombudsman pay guides or the Pay and Conditions Tool to capture the updated base rates, casual loading percentages, penalty rates, and allowances for each award or the national minimum wage. Download or save the pay guide PDFs for your records.
3. Update payroll settings. Update pay items and employee base rates in your payroll software or spreadsheet, and set the effective date to the first full pay period on or after 1 July. If you use payroll software, many systems will prompt you to apply the new rates or provide an update file.
4. Review rosters and penalties. Check ordinary hours, penalty windows, and overtime rules against planned rosters before the first July pay run. Confirm that weekend, public holiday, and overtime penalty rates are calculated correctly under the new base rates.
5. Communicate changes. Send employees a brief written notice of their new rates and the effective date, and file the communication. Clear communication builds trust and reduces queries or disputes later.
6. Audit the first pay run. Spot-check payslips against the pay guides after the first pay run under the new rates, and correct any shortfalls immediately with documented adjustments. Keep a record of the audit and any corrections made.

Tools to stay compliant

Staying on top of the rules, award rates, and payroll updates for the minimum wage in Australia can be complex. The right tools and resources make compliance easier and reduce the risk of costly errors.

Fair Work pay calculator

The Fair Work Ombudsman Pay and Conditions Tool is a free online calculator that helps you confirm coverage, base rates, loadings, penalties, and allowances for specific roles and industries.

Enter the employee's job title, industry, and employment type, and the tool will show the applicable award, classification, and pay rates. You can also generate a summary report to save for your records or share with your accountant.Use this tool every time you hire a new employee, change an employee's role, or update rates after the annual wage review.

Payroll software

Payroll software can automate pay runs, update pay items from a chosen pay period, and support Single Touch Payroll reporting without manual rework. Some payroll software integrates with your accounting data, so wage costs flow directly into your profit and loss and cash flow reports.

When award rates change, you can update employee pay items once in the software, and the system will apply the new rates to all future pay runs. Built-in compliance checks can help you catch errors before you finalise and submit payroll.

Award interpretation apps

Workforce management apps that integrate with your payroll system can automate award interpretation, penalty rate calculations, and rostering rules. These apps reduce manual calculations and the risk of underpayment by applying award rules in real time as you build rosters and approve timesheets.

Look for workforce management apps that integrate with your accounting and payroll software, or speak to your accountant about rostering and workforce tools that suit your industry and award coverage.

Record keeping with Hubdoc

Capturing and storing payroll documents, employee notices, and rate change confirmations in one place makes audits and compliance checks faster and less stressful. Hubdoc lets you photograph, upload, or email payroll records, employee contracts, and Fair Work pay guides directly into your accounting software files. All documents are securely stored in the cloud, tagged, and searchable, so you can find what you need in seconds during an audit or employee query.

Superannuation

The superannuation guarantee is on top of base pay where eligible, and payroll should calculate it on ordinary time earnings. The super guarantee rate is 12% of an eligible employee's ordinary time earnings, unchanged since reaching its final legislated step on 1 July 2025.

Make sure your payroll system calculates super on the correct earnings base, excludes overtime and some allowances where appropriate, and tracks contributions for timely payment to your employees' super funds. The Australian Taxation Office (ATO) superannuation page provides guidance on eligibility and calculation rules.

From 1 July 2026, employers must also pay superannuation contributions at the same time as wages under the new Payday Super rules, rather than quarterly. Check the ATO's Payday Super guidance to confirm how this affects your payroll cycle and cash flow planning.

Simplify minimum wage payroll with Xero

Managing minimum wage compliance across multiple employees and award classifications can take time, especially when rates change each July. Xero Payroll helps you automate pay calculations, apply award rules, and keep your records ready for review.

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FAQs on minimum wage in Australia

Here are common questions and answers about the minimum wage in Australia:

Do I include superannuation in the minimum pay rate?

No. You must pay at least the minimum cash wage, then calculate and pay superannuation on top of ordinary time earnings as a separate cost.

Do contractors have a minimum wage?

No. Independent contractors are not employees and are not covered by the national minimum wage in Australia or modern awards. Contractors negotiate their own rates and invoice for work completed. However, if a worker is misclassified as a contractor when they are actually an employee, they are entitled to the minimum wage and all employee entitlements. Visit the ATO employee or independent contractor page to confirm the correct classification.

How do I convert the weekly minimum to an hourly rate for part-time employees?

The national minimum wage is published as both a weekly rate ($1,004.90) and an hourly rate ($26.44). To convert the weekly rate to an hourly rate, divide the weekly amount by 38 (the standard full-time ordinary hours). For part-time employees, pay the hourly rate for each ordinary hour worked. If an award applies, use the award's ordinary hours and hourly rate for the employee's classification.

How do allowances and penalty rates interact with the minimum wage?

Allowances and penalty rates are paid on top of the base minimum pay rate for Australia or the award rate. These allowances compensate employees for specific conditions, tools, or responsibilities, such as a uniform or first aid purchases. Penalty rates apply when employees work outside ordinary hours, such as weekends, public holidays, or overtime. Both are calculated working off the base rate, and both must be paid in addition to the minimum wage to ensure compliance.