From 1 July 2025, several important changes will commence. The key change is the increase to the National Minimum Wage coming out of the Fair Work Commission’s (“FWC”) Annual Wage Review Decision (“AWRD”), but there are also a number of additional changes which will take effect on 1 July.
The National Minimum Wage will increase from $24.10 to $24.95 per hour and $915.90 to $948 per week from the first full pay period on or after 1 July 2025. Minimum rates in modern awards will also increase by 3.5% from the first full pay period starting on or after 1 July 2025.
Gender based undervaluation
The FWC has undertaken a review to consider changes to certain classifications and minimum wage rates in five priority awards:
Pharmacy Industry Award 2020
Health Professionals and Support Services Award 2020
Aboriginal and Torres Strait Islander Health Workers and Practitioners and Aboriginal Community Controlled Health Services Award 2020
Children’s Services Award 2010
Social, Community, Home Care and Disability Services Industry Award 2010
The FWC has decided to rectify the identified gender-based undervaluation in the Pharmacy Industry Award 2020. This involves a 14.1% increase which will be introduced in three phases from 30 June 2025. Provisional views in relation to the other four priority awards is set out in the review decision (Gender-based undervaluation – priority awards review decision | Fair Work Commission).
Superannuation
The superannuation guarantee rate will increase from 11.5% to 12% on 1 July 2025. This is the final increase to the superannuation guarantee which has been increasing annually by 0.5%.
The application of this increase will depend on the structure of an employee’s contract. For employees who are paid an amount of remuneration inclusive of superannuation, the overall payment made to them will not change, but they will see a decrease in their take home pay. For employees paid a base amount plus superannuation, they will see an increase in their overall pay as the 0.5% is an additional superannuation contribution payment.
The maximum superannuation contributions base will be $62,500 per quarter for the income year 1 July 2025 to 30 June 2026. If an employee earns more than $62,500 per quarter their employer is not required to pay superannuation contributions on the amount exceeding the maximum base.
High income threshold and contractor high income threshold
The high income threshold and contractor high income threshold will increase from $175,000 to $183,100 per annum. This is an important threshold which determines unfair dismissal eligibility, the guarantee of annual earnings figure, the compensation cap for unfair dismissal (being half of the high income threshold) and protections for employee-like workers.
Redundancy tax-free amounts
The tax-free amounts for redundancy payments will increase to $13,100 plus $6,552 per year of service.
Government paid parental leave
The number of government paid parental leave days a family will have access to will increase from 22 weeks to 24 weeks. Single parents will be entitled to all parental leave days. The number of reserved partner days will increase to 3 weeks. From 1 July 2025, parents will be able to take up to 20 days of paid parental leave at the same time.
Paid parental leave superannuation contribution
From 1 July 2025, parents who are entitled to paid parental leave will also receive the new paid parental leave superannuation contribution. The payment will only apply to parents whose children are born or adopted on or after 1 July 2025 and is paid by the ATO.
What to do
With many changes coming into effect it is a good time for employers to take stock of their systems and ensure that they are complying with legislative requirements.
Most employers will have a to do list as a result of these changes, these are some of the items that should be on that list:
ensure payroll systems are up to date;
check the new wage amounts in applicable modern awards and ensure the correct payments are being made to employees;
check the new wage amounts against any enterprise agreement to ensure the base rate of pay in the enterprise agreement remains higher than any applicable modern award;
assess whether there is any risk of underpayment (particularly important with intentional underpayment being a criminal offence since 1 January 2025);
consider whether any parental leave policy needs to be updated;
consider whether any upcoming termination calculations need to be revised;
if negotiating for an enterprise agreement, use the latest modern award wages for any better off overall analysis;
review employment contracts to determine how the superannuation changes need to be applied;
consider whether any employee with a guarantee of annual earnings now falls below the high income threshold; and
check when the weekly pay period commences as the new minimum wage rates will apply from this day.
