On 3 June 2025, the Fair Work Commission handed down its Annual Wage Review 2025 decision, confirming a 3.5% increase to the National Minimum Wage, effective from 1 July 2025. This decision impacts millions of Australian workers and carries compliance and budgetary implications for employers across all industries. Here’s your guide to staying compliant and preparing your workforce for the year ahead.

You might’ve seen headlines like:

“Company back paying $1.2 million in wages after Fair Work Ombudsman finds underpayments over the last 3 years.” So, how does this happen and more importantly, how can you avoid it?

Key Changes at a Glance

Many employers mistakenly assume that paying a fixed salary covers everything. But under a modern award, you’re still required to track and pay:

Effective From:

The first full pay period on or after 1 July 2025

New National Minimum Wage:

$24.94 per hour (up from $24.10) $51,511.95 per year for full-time workers (up from $49,770.40)

Who’s Affected:

Employees on the National Minimum Wage Employees covered by Modern Awards, which will also be adjusted

Why the Increase?

The Commission cited the decline in real wages since July 2021 and the recent easing of inflation (now sitting at 2.4%) as key factors in their decision. This increase is designed to support low-paid workers while avoiding adverse effects on employment levels or economic productivity.

Is Your Business Ready for the July Wage Increase?

With the new minimum wage and award rate changes coming into effect from 1 July 2025, now is the time for employers to pause and ask:

• Have you reviewed which roles in your business are affected?
• Are your systems and processes ready to reflect the updated rates?
• Have you considered the flow-on impact to loadings, allowances, and entitlements?

Getting it wrong could lead to costly backpay, compliance issues or damage to your reputation, particularly with the ongoing spotlight on wage underpayments. No matter the size or nature of your business, now is a good time to step back and consider whether your current payroll and HR processes are still working for you. If you’re feeling unsure about what needs to be done or want a second set of eyes, our team is here to support you.

Case Example: Underpayment Risks

In 2024, a small business in Victoria failed to update pay rates following the July wage increase. A Fair Work audit found underpayments across three employees totalling $3,300. Due to lack of evidence of proactive review or intent to rectify, the business was issued a $12,000 infringement notice. Key takeaway: Wage compliance isn’t just about numbers. It’s about accountability.

Final Thoughts

This year’s minimum wage rise is a timely reminder that staying compliant isn’t just about ticking a box. It’s about protecting your people and your business. As award rates shift and obligations evolve, this is the moment to evaluate how prepared your business really is. Not only for this change but also for what comes next.

• Are your pay structures ready for 1 July?
• Have you reviewed your internal systems to avoid underpayment risks?

At LMHR, we work alongside businesses nationwide to simplify complex legislation and strengthen compliance across every layer of your workforce. From award interpretation to payroll updates, we’re here to help you move forward with confidence.