From July 1, 2025, the Minimum Wage in Australia will increase by 3.5%, following the Fair Work Commission’s latest announcement.
If you run a small or medium-sized business, now’s the time to start preparing because this change isn’t just a number on paper. It directly affects your wage bills, budgeting, and compliance obligations.
What’s Changing?
The National Minimum Wage and award minimum wages will both go up by 3.5% from July 1st.
Whether you have part-time retail staff or full-time childcare workers, this increase will likely apply to at least a portion of your team.
Who Does This Impact Most?
Around 3 million workers on award wages will benefit and many of them work in industries dominated by SMEs, such as:
- Retail
- Hospitality
- Childcare
- Cleaning services
- Security
- Community services
If your business operates in these sectors and relies heavily on award or minimum wage workers, you’ll feel this cost increase more directly than most.
When Do You Need to Make the Change?
The new Australia minimum wage rates kick in from the first full pay period on or after July 1, 2025.
For example:
- If your pay period starts July 1, the new rates apply immediately
- If your pay week starts Wednesday, July 2, that’s when you switch to the new rates
Check your payroll cycle now to be sure when the increase needs to apply.
What Do You Need to Do?
Here’s a simple checklist tailored for SME owners to stay compliant and avoid last-minute issues:
Before July 1:
- Identify which employees are on minimum or award wages
- Update your payroll software with the new rates (once confirmed)
- Notify staff affected by the increase
- Review contracts if any updates are needed
System Updates to Make:
- Base hourly rates
- Industry-specific award rates
- Casual loading (still 25%)
- Overtime calculations
- Leave entitlements linked to minimum wage
After July 1:
- Run test pay runs to make sure everything calculates correctly
- Watch the first few pay cycles closely for errors
- Keep records to prove compliance if audited
What’s the Cost Impact?
While this increase is slightly lower than last year’s 3.75%, it’s still a real cost for your business — especially if you have a team of minimum wage staff.
Now’s the time to factor this into your FY25–26 budget and cash flow forecasts. Planning ahead helps avoid surprises.
Stay Compliant – or Risk Penalties
Even unintentional underpayments can result in penalties or the need to backpay employees. That’s why it’s crucial to:
- Update payroll systems early
- Keep accurate records
- Seek advice if you’re unsure how the new rates apply to your team
Final Tip for SME Owners
This is more than just a payroll update — it’s a legal obligation. Getting it wrong can cost you both money and trust.
Tackle the update early, keep your staff informed, and use this as an opportunity to tighten up your payroll systems before the new financial year kicks off.
