What the 2025 Minimum Wage Increase Means for Your Business
- Tim Dive
- Jun 3
- 3 min read
Updated: Aug 1
The Fair Work Commission has just delivered its 2025 Annual Wage Review decision and, once again, wages are on the rise.
From 1 July 2025, the National Minimum Wage and modern award minimum wages will both increase by 3.5%. While the percentage uplift may appear modest in light of broader inflation figures, for thousands of small and medium-sized employers, it adds another layer of cost and compliance pressure in an already tight market.
So, what drove the decision, and what should employers be doing right now?
Why the Commission Lifted Wages
The Commission pointed to several key factors in reaching its decision:
Cost of Living: Even though inflation is cooling (currently at 3.6%), it’s still above the Reserve Bank’s target. Workers reliant on award wages have had real wage losses for two years now. The Commission was clear, these workers need relief. As a side note, it's interesting to hear the Commission declare "real wages" have gone backwards, opposing our Government's claims that wages have increased under their watch.
Weak Productivity: The review acknowledged that labour productivity growth has been stagnant. But interestingly, the Commission placed the responsibility for fixing that squarely on business owners, suggesting that better workforce organisation or capital investment is the answer. (We have thoughts on that.)
Gender Pay Equity: There’s been a growing focus on undervaluation in female-dominated sectors. Several awards are undergoing further review. Expect more movement here over the coming year.
Low-Risk Assessment: Despite acknowledging the strain on small business, the Commission believes that this year’s increase wouldn't materially hurt employment or push businesses over the edge. (Time will tell - needless to say, we totally disagree.)
What Employers Need to Do Now
If you employ award-covered staff and especially if you operate in hospitality, retail, aged care, or admin-heavy environments, here are your immediate action steps:
Get Clear on the New Rates: Review the modern awards relevant to your business. New pay guides and award summaries will be published before 1 July. Don't guess — get it right.
Update Contracts Where Needed: For employees sitting on the minimum award rate, update their wage records and payroll settings to reflect the increase from 1 July.
Prepare for Flow-On Costs: Remember, it’s not just base wages going up, super increases to 12%, and penalty/overtime rates will rise accordingly. Factor this into your rosters and pricing now.
Check Your Systems: Whether you’re using Tanda, Deputy, FoundU, Xero, or something else, make sure your system reflects the correct award level, classification, and rate.
Communicate with Staff: It’s a good time to get on the front foot. Let your team know the changes, explain what it means for them, and ensure transparency.
Compliance and Survival
For many of our clients, wage increases aren’t just about compliance, they’re survival-level decisions.
Every extra dollar needs to come from somewhere. If you’re not across your obligations now, you could be facing underpayment issues, backpay, or even wage theft risks down the line.
Need help decoding the award? Want us to check your classifications? Reach out.
We’re on top of it — so you don’t have to be buried in Commission PDFs and backpay calculators.
Comments