Fair Work Commission confirms increases to employee minimum wage from 1 July 2025
Employers should be aware of several increases to employee minimum entitlements that will come into effect from 1 July 2025. These changes include increases to modern award minimum rates of pay and the National Minimum Wage (NMW).
The Fair Work Commission (FWC) has delivered its decision in the Annual Wage Review 2024-25 (the Decision). As part of the Decision, the FWC has increased award minimum rates of pay by 3.5%. This increase will take effect from the first full pay period on or after 1 July 2025, and applies to all Australian employees who are paid at the minimum rates specified in a modern award.
From the first full pay period on or after 1 July 2025, the NMW will increase from $24.10 per hour to $24.95 per hour. This corresponds with a weekly minimum wage increase from $915.90 per week to $948.00 per week. This increase must be paid to all employees who receive the NMW.
In determining the level of increase, strong consideration was given to the ongoing inflationary pressures observed over the last three Annual Wage Review Decisions. These inflationary trends eroded the real value of wages. Since July 2021, there has been a 4.5% decline in the real value of modern award wages relative to the Consumer Price Index (CPI). Notably, the NMW experienced a comparatively smaller decline of 0.8% in its real value. The FWC noted that living standards for award-reliant employees have been ‘squeezed’. Due to low wages, these employees experienced increasing difficulty in meeting their everyday needs.
In light of ongoing employment growth, low unemployment rates, and historically high rates of participation in the workforce, the FWC was satisfied that the level of increase determined is sustainable. The FWC also anticipated a further economic growth due to recent reductions in interest rates.
The FWC acknowledged the concerns of the business community about poor levels of labour productivity growth but found this was not a reason not to restore the real value of wage values. Instead, these concerns operate as a restraining factor that limits the potential for a larger increase to be awarded.
This alert serves as a timely reminder to employers to ensure that employees are paid in accordance with their applicable minimum entitlements from the first full pay period on or after 1 July 2025. Any employees covered by a modern award, or employees receiving the NMW must be paid at their new applicable minimum rate.
These increases do not apply to public sector employees who are covered by State Awards.
Should you wish to discuss any material contained in this article, please contact Sathish Dasan on +61 8 8210 1253 or sdasan@normans.com.au, Lincoln Smith on +61 8 8210 1203 or lsmith@normans.com.au or Annabelle Narayan on +61 8 8210 1292 or anarayan@normans.com.au.
