Australia's 1 July 2026 Wage and Leave Changes: The Payroll Budgeting Guide for Foreign Companies

Three major employment cost changes took effect from 1 July 2026 in Australia, all at once. The Fair Work Commission's Annual Wage Review decision lifted the National Minimum Wage by nearly 6% and all Modern Award rates by 4.75%. The government-funded Paid Parental Leave scheme expanded to 26 weeks. And Payday Superannuation — requiring super to reach employees' funds within seven business days of every payday rather than quarterly — came into effect.

For a foreign company with Australian staff, this is not a minor administrative update. It is a material change to your Australian employment cost base that requires action before your next pay cycle, not after.

This guide covers exactly what changed, what the numbers mean for your payroll budget, and what you need to update — including the steps most foreign employers miss.

The 2026 Annual Wage Review: What the FWC Decided and Why

What is the Annual Wage Review and how does it work?

Under the Fair Work Act 2009, the Fair Work Commission is required to conduct an Annual Wage Review every year. The review has two functions: setting the National Minimum Wage (which applies to employees not covered by a Modern Award or enterprise agreement) and adjusting the minimum pay rates in all 155 Modern Awards.

On 2 June 2026, the Fair Work Commission's Expert Panel handed down its decision in the 2026 Annual Wage Review. The decision was reached against an economic backdrop of elevated inflation, with the Reserve Bank forecasting headline CPI of approximately 4.8% for the year to June 2026.

The FWC concluded that it would not be practicable or responsible in the current uncertain circumstances to award a real wage increase for employees reliant on modern award wage rates that would be sufficient to close the real wage gap entirely. However, the Commission determined that modern award-reliant employees should at least not be worse off in real terms than they were as at 1 July 2025.

The result: a 4.75% increase to Modern Award rates — just below inflation — and a larger 5.97% increase to the National Minimum Wage, reflecting the structural adjustment to the lowest-paid classification.

This increase is larger than the 3.50% awarded in 2025 and the 3.75% in 2024, but smaller than the 5.75% in 2023. It directly affects around 21.1% of the workforce who are paid at the applicable minimum wage or award rate.

When do the new rates apply?

Modern award minimum rates will increase by 4.75% effective from the first full pay period commencing on or after 1 July 2026. For monthly-paid employees, that may mean the August 2026 pay run, not July itself. Check the start date of your current pay period — "1 July" does not always mean the July pay run.

The National Minimum Wage: From $24.95 to $26.44 Per Hour

What is the new National Minimum Wage from 1 July 2026?

The National Minimum Wage rises 5.97% to AUD $26.44 per hour ($1,004.90 per week) — the first time the NMW has crossed $1,000 per week.

By contrast with award rates, only a very small proportion of workers are paid the National Minimum Wage itself. The Commission considered that the NMW adjustment would have no discernible effect on the wider economy — but for any foreign employer with award-free employees paid at or near the minimum wage, the increase is immediate and mandatory.

Who the NMW applies to:

The National Minimum Wage applies to employees in the national workplace relations system who are not covered by a Modern Award or enterprise agreement. In practice, most Australian employees are award-covered — meaning the 4.75% Modern Award increase is the more widely applicable figure for most foreign employers' Australian teams.

Modern Award Rates: 4.75% Across All 155 Awards

How does the 4.75% Modern Award increase work in practice?

The 4.75% increase flows onto Modern Award minimum wages for all classification levels, with those increases also effective from the first full pay period commencing on or after 1 July 2026.

Australia has 155 Modern Awards covering most industries and occupations — from retail and hospitality to professional services, construction, IT and healthcare. Each Award contains multiple classification levels with different minimum pay rates. The 4.75% increase applies to every minimum rate in every Award, at every level.

Why this matters more than most foreign employers realise:

Many foreign companies assume that because they pay their Australian employees above award rates, the annual wage review is irrelevant to them. This is often incorrect for two reasons.

First, where an employer has staff on above-award salaries, they need to check that the salary continues to result in the employee being better off overall compared to what they would have received under the Award — including Award-mandated allowances, penalty rates and overtime. If the Award rates have risen by 4.75% and your above-award salary has not, you may inadvertently be paying less than the Award would require when all entitlements are counted.

Second, modern awards also contain allowances, penalty rates, overtime rates and casual loadings — all of which are expressed as multiples of the base classification rate. A 4.75% increase to the base rate flows through to all of these components. An employee whose base rate increases by 4.75% also has their Saturday penalty rate, overtime rate, and any applicable allowances increase by 4.75%.

How to find the new Award rates for your employees:

The Fair Work Commission publishes per-award rate tables after each Annual Wage Review. The most reliable tool for checking current award rates for specific classifications is the Fair Work Ombudsman's Pay and Conditions Tool (PACT) at fairwork.gov.au. If you are unsure which Award covers your Australian employees, or how to classify them correctly, this is one of the areas where professional advice pays for itself quickly.

The C13 Structural Adjustment: The Change Within the Change

What is the C13 structural adjustment and who does it affect?

The decision begins the three-stage phase-out of the C13 classification. Affected employees receive an additional structural adjustment beyond the headline 4.75%.

The FWC decided to adjust the lowest minimum wage rate applicable to ongoing employment in Modern Awards — the C13 level — up to the next-lowest rate (the C12 level) in a staged manner.This means the lowest-paid ongoing classification in any Modern Award must now be at least $1,004.90 per week — equal to the National Minimum Wage.

Who is affected:

Employees classified at the C13 level in Modern Awards — typically entry-level positions in manufacturing, logistics and some service industries — receive a wage increase larger than 4.75% in 2026. Their award rate is adjusted to match C12, which in most awards represents a more significant uplift than the headline figure.

If you have Australian employees in entry-level classification roles, check whether they are classified at C13 in their relevant Award and apply the correct (higher) rate from the first full pay period after 1 July 2026.

What the Wage Increases Mean for Your Payroll Budget

How do I calculate the cost impact of the July 2026 wage increases?

The cost impact depends on your Australian team's size, classification, and how their current salaries relate to award minimums. Here is a practical framework for calculating the budget impact.

Step 1: Identify which employees are award-covered

Check each Australian employee's Modern Award coverage and classification level. The Fair Work Ombudsman's PACT tool can help. Any employee classified under a Modern Award has their minimum pay rate set by that Award — and that minimum has just risen by at least 4.75%.

Step 2: Apply the increase to minimum rates

For each classification, apply the 4.75% increase (or higher for C13 employees) to the current minimum rate. Update your payroll system with the new rates from the correct effective date.

Step 3: Check above-award salary employees for betterment

For employees on above-award salaries, run a betterment comparison: does their total remuneration (including all Award entitlements they would otherwise receive) still exceed what the Award now requires? If the answer is no after the 4.75% increase, you need to adjust the salary.

Step 4: Update allowances and penalty rates

All Award-based allowances, penalty rates and overtime rates that are expressed as multiples of the base classification rate increase by 4.75% automatically. Ensure your payroll system applies these correctly.

Budget impact illustration:

For a foreign employer with 5 Australian employees on minimum Modern Award rates at a combined annual cost of AUD $300,000 in the 2025-26 year:

Add Payday Super cash flow adjustment (super now due within 7 business days of each payday rather than quarterly) and your working capital requirement also changes — factor this into cash flow planning.

Paid Parental Leave: From 120 to 130 Days

What changed with Australia's Paid Parental Leave scheme from 1 July 2026?

The Paid Parental Leave Amendment (More Support for Working Families) Act 2024 completed its final phase on 1 July 2026. For any child born or adopted from that date, government-funded Parental Leave Pay now runs to 130 days — 26 weeks based on a 5-day working week.

This is the completion of a staged expansion:

For babies born or adopted from 1 July 2026, the family entitlement is 130 days. If you have a partner on the day you claim, 20 days of Parental Leave Pay will be reserved for them to use on a use-it-or-lose-it basis.

How much is paid and by whom:

The 2026–27 Paid Parental Leave rate is $200.98 per day before tax, or $1,004.90 per 5-day week — equal to the new National Minimum Wage. Over 130 days, the total government-funded payment is $26,127.40 before tax.

This is critical for foreign employers to understand: government-funded Paid Parental Leave is paid by Centrelink / Services Australia, not by the employer. Your obligation as an employer is to grant unpaid parental leave, manage the absence, and plan for the workforce coverage required — not to fund the payment itself.

However, if your enterprise agreement or employment contract provides for employer-funded top-up payments above the government scheme, those obligations exist separately and must be reviewed in light of the expansion to 130 days.

What about pre-birth claims lodged before 1 July 2026?

If an employee submitted a pre-birth claim before 1 July 2026, their Parental Leave Pay balance will initially show as 120 days. Once they provide proof their child was born or entered care from 1 July 2026, Services Australia will add the extra 10 days to their balance. Remind affected employees of this process.

Superannuation on Parental Leave Pay: The New ATO Obligation

Is superannuation now paid on government-funded Parental Leave Pay?

Yes — and this is a change that many foreign employers have not yet registered.

Employees receiving Parental Leave Pay for children born or adopted from 1 July 2025 will receive a superannuation contribution of 12% on their payment. The Australian Taxation Office (ATO) will pay superannuation directly to the employee's superannuation fund. These contributions will be paid from July 2026 onwards.

To be precise on timing: the ATO contribution applies to PPL payments for children born or adopted from 1 July 2025, but the ATO began making these contributions into super funds from July 2026 onwards.

For a family receiving the full 130-day entitlement, the government super contribution is $3,135.29 — paid by the ATO directly to the employee's nominated super fund.

What this means for your payroll administration:

The super contribution on PPL is paid by the ATO, not by you as the employer. However:

• You need to ensure your payroll system correctly records PPL periods and does not inadvertently trigger your own employer super contributions on a payment you are not making
• If your employment contracts or policies reference super contributions during parental leave, review whether the ATO contribution satisfies or interacts with those contractual obligations
• Inform your Australian employees of this entitlement — many are not aware that government-funded PPL now attracts a super contribution
  
  

The Combined Impact: Budgeting for All Three Changes Together

How should foreign companies budget for the combined effect of the July 2026 changes?

The three changes that took effect from 1 July 2026 interact in ways that create a combined cost and cash flow impact greater than any single element:

Award rate increases (4.75%) + Payday Super (cash flow timing) + Parental leave expansion (workforce planning):

While the Paid Parental Leave payment is funded by the Australian Government, employers still need to understand how the change may affect workplace planning, payroll administration and employee entitlements. A 130-day (26-week) parental leave absence requires more planning than a 20-week absence — particularly for small Australian teams where a single employee's role is business-critical.

The combined payroll budget framework for July 2026:

Practical cash flow note on Payday Super interaction:

From 1 July 2026, every time you run payroll (weekly, fortnightly or monthly), super must reach each employee's fund within seven business days. For a company that previously batched quarterly super payments, this changes when cash leaves your account — not how much, but when. For award-rate employees whose super base just increased by 4.75%, the per-payment super amount also increases from 1 July 2026. Ensure your super clearing house integration reflects both the new rates and the new timing.

What Foreign Companies Must Action Before Their Next Pay Run

What is the compliance checklist for the July 2026 wage and leave changes?

Immediate actions — before or at your next pay run:

1. Identify the effective date for your pay cycle. The new rates apply from the first full pay period starting on or after 1 July 2026. If your pay period starts on 30 June, the new rates apply from that period's start. If it starts on 7 July, the new rates apply from 7 July. Monthly-paid employees may not see the new rates until August.
2. Update the National Minimum Wage in your payroll system. For any award-free employees at or near the minimum wage, update to $26.44/hour from the effective date.
3. Load new Modern Award rates for every award classification in your team. Use the FWC's updated rate tables or the Fair Work Ombudsman's PACT tool to confirm the correct new rate for each classification.
4. Check C13 employees specifically. If any of your Australian employees are classified at C13 in their award, their new rate may be higher than the headline 4.75% — confirm and apply the correct figure.
5. Run a betterment check for above-award salary employees. Confirm that each above-award salary still exceeds what the employee would receive under the Award (including allowances and penalty rates) after the 4.75% rate increase.
6. Update allowances and penalty rates in your payroll system. All award-based allowances, penalties and overtime rates that are multiples of the base classification rate increase by 4.75% automatically.
7. Confirm Payday Super is operational. If you have not yet implemented real-time super payments via a super clearing house, this is the most urgent compliance gap. Super must reach employees' funds within seven business days of every payday — for every pay cycle, not just the first one.
8. Update workforce planning for PPL absences. For any employee currently pregnant or likely to take parental leave for a child born after 1 July 2026, update your absence cover planning to reflect the 130-day (26-week) entitlement.
9. Inform employees of the PPL super contribution. Employees taking PPL for a child born from 1 July 2025 are entitled to an ATO-paid 12% super contribution on their PPL. Most employees are not aware of this — communicate it proactively.
10. Review high-income threshold positions. The high-income threshold also rises on 1 July 2026, which can affect award coverage and any guarantee of annual earnings arrangements for higher-paid staff. Review any affected positions to confirm correct award coverage status.
    
    

How Expandys Manages Australian Payroll Compliance for Foreign Companies

The July 2026 changes represent exactly the kind of multi-layered compliance event that is straightforward to manage with the right local support — and expensive to get wrong without it.

Expandys provides fully managed Australian payroll outsourcing for foreign companies expanding to Australia, as part of an integrated market entry service. What this means in practice for the July 2026 changes:

• Wage rate updates applied automatically. Our payroll configuration is updated from the first full pay period after 1 July 2026 with the correct NMW, per-award classification rates, C13 adjustments, and allowance/penalty rate calculations — without you needing to load a single rate manually
• Payday Super fully integrated. Our Australian payroll infrastructure includes real-time super clearing house integration that meets the seven-business-day requirement from day one of every pay cycle
• Betterment checks run as standard. For clients with above-award salary employees, we run betterment comparisons after each Annual Wage Review to confirm that existing salary arrangements remain compliant
• PPL administration coordinated. We manage the interaction between government PPL, ATO super contributions and your employment contracts — ensuring your payroll records are correct and your employees are informed of their entitlements
• High-income threshold review included. We flag any affected employees whose award coverage status may have changed as a result of the threshold increase

The payroll compliance event of 1 July 2026 is not a one-off — Australia's Annual Wage Review happens every year, and the compliance obligations evolve with each one. Having managed payroll with a local specialist means these updates happen proactively, not reactively.

Frequently Asked Questions: Australia Wage and Leave Changes 2026

What is the new minimum wage in Australia from 1 July 2026?

The National Minimum Wage increased to AUD $26.44 per hour ($1,004.90 per week) from the first full pay period on or after 1 July 2026 — a 5.97% increase from the previous rate of $24.95 per hour ($948.10 per week). This is the first time the National Minimum Wage has exceeded $1,000 per week. Note that the NMW applies only to employees not covered by a Modern Award or enterprise agreement. Most Australian employees are award-covered, and their minimum rates are set by the applicable Modern Award — which increased by 4.75% from the same date.

How much did Modern Award wages increase from 1 July 2026?

Modern Award minimum rates increased by 4.75% effective from the first full pay period commencing on or after 1 July 2026. This increase flows onto all classification levels in all 155 Modern Awards, and also flows through to award-based allowances, penalty rates and overtime rates that are expressed as multiples of the base classification rate. Employers with above-award salary employees should also run a betterment check to confirm that the above-award salary still exceeds the total Award entitlement after the 4.75% base rate increase.

Do the wage increases apply to all Australian employees?

The FWC's 2026 Annual Wage Review decision directly affects around 21.1% of the workforce — almost 2.8 million people paid at an applicable minimum wage rate under a Modern Award. Employees paid above Modern Award minimum rates are not automatically entitled to a 4.75% increase — but their employer must check that the existing salary still constitutes a better-off overall position compared to the Award after the rate increase. Employees on enterprise agreements have their pay set by that agreement, which may contain its own annual increase mechanisms.

How many weeks is paid parental leave in Australia from July 2026?

From 1 July 2026, government-funded Paid Parental Leave expanded to 130 days, which is 26 weeks based on a five-day working week. This applies to children born or adopted on or after 1 July 2026. It is the final step in a phased expansion that has progressively increased Australia's PPL scheme from 20 weeks to 26 weeks since July 2024.The payment rate is $200.98 per day before tax ($1,004.90 per week), paid at the National Minimum Wage by the Australian Government (Centrelink / Services Australia) — not by the employer.

Do employers have to pay superannuation during parental leave in Australia?

From July 2026, the ATO pays a 12% superannuation contribution on government-funded Parental Leave Pay for children born or adopted from 1 July 2025. This contribution is paid by the ATO directly into the employee's super fund — not by the employer. Employers do not have to pay their own employer super contributions on government-funded PPL payments (because the employer is not making the payment — the government is). However, if an employment contract or enterprise agreement requires the employer to make super contributions during parental leave in addition to statutory entitlements, those contractual obligations exist separately and must be honoured.

When exactly do the July 2026 wage increases take effect?

The new rates apply from the first full pay period commencing on or after 1 July 2026 — not necessarily from 1 July itself. A pay period that started on 30 June 2026 and runs to 13 July 2026 is entirely paid at the old rates. A pay period starting on 7 July 2026 applies the new rates for its full duration. Monthly-paid employees whose pay period starts on 1 August 2026 will not see the new rates until that August pay run. Check the start date of your current pay period and apply the new rates from the correct date — not automatically from 1 July.

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