Workplace Wrap - July 2025

As we find ourselves in the new financial year, a number of the key financial thresholds relating to employees have changed. Click here to view our summary of the key thresholds for the 2025/2026 financial year. 

From 1 July 2025, the national minimum wage has increased by 3.5% to AU$24.94 per hour. 

Award minimum wages have also risen by 3.5%. 

In reaching its conclusion as to the national minimum wage, the Fair Work Commission has cited its principal consideration as a reduction in the real value of wages for employees. 

The Fair Work Commission notes this reduction has been driven by the spike in inflation beginning in 2021 and peaking in late 2022. The result, in the eyes of the Fair Work Commission, has been that the lower paid have experienced greater difficulties in meeting their everyday needs.

Therefore, the Fair Work Commission has sought to temper real wage decline without contributing to higher inflation. 

The Fair Work Commission notes its wage decision this year has been moderated by the upcoming increase in the Superannuation Guarantee contribution rate, and the uncertainties caused by the influence of the United States trade policies. However, the Fair Work Commission considered the wage increase determined is sustainable in a labour market that remains strong overall. 

The Fair Work Commission also observed that workforces that are reliant on modern awards for their wage rates are disproportionately female, with more than half being casual employees and more than a third being low-paid employees. The Fair Work Commission also noted that it intends to continue with its targeted review of particular award classifications to eliminate gender-based undervaluation of work and ensure that female workers receive equal remuneration for work of equal or comparable value. 

From 1 July 2025, the Superannuation Guarantee rate will increase to 12%.

The maximum contribution base per quarter has been reduced from AU$65,070 for the 2025 income year, to AU$62,500 for the 2026 income year so as to accommodate the increased contribution rate but noting that the annual concessional cap remains at AU$30,000.

This means that once an employee's ordinary time earnings exceed AU$62,500 per quarter, employers are not required to make further superannuation contributions under the Superannuation guarantee legislation. If separate contractual obligations to pay superannuation apply, these obligations are unaffected.

The changes will apply from the first full pay period starting on or after 1 July 2025.

We note that whilst the Australian Taxation Office will begin making superannuation contributions on government-funded Parental Leave Pay, parental leave paid by an employer will continue to not fall within the definition of ordinary time earnings such that employers are not required to pay superannuation on these amounts.

The Fair Work Act’s high income threshold will also be indexed and from 1 July 2025, has increased to AU$183,100. Non-award and non-enterprise agreement covered employees who earn in excess of AU$183,100 will be unable to bring an unfair dismissal claim.

There has been no change in the value of penalty units applicable to the Fair Work Act which remain at AU$330 per unit. 

What You Should Be Doing From 1 July?

Employers should:

• Review annualised salary arrangements to ensure that the annualised wage rate is sufficient to meet or exceed the employees’ minimum award or minimum wage entitlements taking into account the 3.5% increase.
• Update payroll systems and processes to ensure the increased wages and superannuation contribution are paid from the first full pay period starting on or after 1 July 2025 and note the change to the maximum contribution base.
• Review enterprise agreement pay rates (where applicable) and ensure the pay rates do not fall below the applicable modern award base rate or the national minimum wage (as applicable).
• Ensure all employees who are eligible are being paid the appropriate super guarantee. 
• Be mindful of the new high income threshold of AU$183,100.

How Can We Help?

If you have any questions about the effect of the 1 July 2025 threshold increases on your payment obligations as an employer, please contact our Labor, Employment and Workplace Safety team.