The 2026 Annual Wage Review: What's Being Asked For and What Employers Should Prepare For

The 2026 Annual Wage Review Is Underway

Every year, the Fair Work Commission's Expert Panel conducts the Annual Wage Review to determine whether minimum and modern award wages should increase — and by how much. The 2026 review is now in progress, with submissions lodged and oral hearings scheduled for April and May. The decision is expected in early June, with any increase taking effect from the first full pay period on or after 1 July 2026.

For the roughly 2.6 million Australian workers whose pay is set by modern awards or the National Minimum Wage, this decision directly determines what they earn. For every employer covered by an award, it determines what you're legally required to pay.

What the Unions Are Asking For

The ACTU has lodged a claim for a 5% increase to the National Minimum Wage and all modern award minimum rates. If granted, this would lift the minimum wage from $24.95 to approximately $26.19 per hour, adding around $2,465 per year to a full-time minimum wage worker's annual pay.

ACTU Secretary Sally McManus has described the 5% figure as a starting position, not a ceiling, with unions reserving the right to increase the claim ahead of hearings. The core argument is straightforward: wages grew 3.4% in the year to December 2025, while inflation for the same period sat at 3.8%. In real terms, low-paid workers are still going backwards.

Individual unions — including the SDA (retail and fast food), HSU (health services), and UWU (hospitality, aged care, cleaning) — are expected to make supplementary submissions with sector-specific evidence about cost-of-living pressures in their industries.

What Employer Groups Are Arguing

On the other side, employer peak bodies including the Australian Industry Group (Ai Group), the Australian Chamber of Commerce and Industry (ACCI), and the Australian Hotels Association are pushing for a more modest increase — broadly in the range of 2.5% to 3%, aligned with current inflation.

Their arguments centre on several points:

• Cumulative cost pressure. Three consecutive years of above-CPI minimum wage increases have already placed significant strain on labour-intensive businesses, particularly in retail, hospitality, and aged care.
• Small business margins. Many small businesses operate on thin margins and cannot absorb large wage increases without raising prices or reducing headcount.
• Compounding compliance costs. The wage increase doesn't land in isolation. From 1 July 2026, employers will also face payday superannuation obligations — requiring super to be paid at the same time as wages rather than quarterly. Combined with rising energy, insurance, and rent costs, the total cost impact on employers is significant.

What the Government Has Said

The Australian Government has lodged a submission supporting a "real wage increase" — meaning an increase above inflation — for award-reliant workers. However, consistent with past practice, the Government has not nominated a specific figure, deferring to the Commission's independent role in weighing the evidence.

What's the Likely Outcome?

Nobody knows the answer until the Expert Panel hands down its decision. But looking at recent history provides some context:

• 2025: 3.5% increase
• 2024: 3.75% increase
• 2023: 5.75% increase (following a period of high inflation)

With inflation trending down but still above the RBA's target band, and with the ACTU pushing hard at 5%, a landing somewhere in the 3.5% to 4.5% range would be consistent with the Commission's recent approach — balancing real wage maintenance against employer capacity to pay.

That said, the Commission has shown willingness to deliver larger-than-expected increases when cost-of-living pressures warrant it. Employers should plan for a range of scenarios rather than banking on a low number.

What Employers Should Be Doing Now

The decision is still months away, but preparation should start now. Specifically:

1. Audit your current pay rates. Before you can assess the impact of any increase, you need to know exactly where your current rates sit relative to the award. If you're already only paying at or just above the minimum, you have direct exposure.
2. Model the cost impact. Run scenarios at 3%, 4%, and 5% across your workforce. Include the flow-on effects to overtime, penalty rates, allowances, and superannuation. Factor in the payday super change from 1 July as well.
3. Review annualised salary arrangements. If you have salaried employees whose pay is intended to cover award entitlements, check that the salary still provides a sufficient buffer. An annualised salary that was compliant at last year's rates may fall short after the increase.
4. Check your classification structures. Are employees classified correctly under their applicable award? Misclassification is one of the most common sources of underpayment, and it compounds with every wage increase.
5. Budget accordingly. Build the expected increase into your FY2026-27 labour budget now, rather than scrambling in July.

Key Dates

• April–May 2026: Oral hearings before the Expert Panel
• Early June 2026: Decision expected
• 1 July 2026: New rates take effect (first full pay period on or after)

Need Help?

Industrial HR specialises in award interpretation, pay compliance, and workforce cost modelling for Australian businesses. If you need help auditing your current rates, modelling the impact of the wage review, or ensuring your pay arrangements are compliant, get in touch.