Every June, the Fair Work Commission announces a pay rise for Australia’s lowest-paid workers. Here’s how the minimum wage and award wages are set, who they cover, and why each decision is fiercely debated.
Australia has one of the highest minimum wages in the world. It’s set by the Fair Work Commission, Australia’s independent workplace relations tribunal, rather than by the Government.
The annual wage review
Each year, the commission’s expert panel conducts an annual wage review. Unions, employer groups, governments and other organisations make submissions, arguing for how much wages should rise.
The decision is usually announced in early June and takes effect from 1 July.
The commission sets two things: the national minimum wage, the lowest amount most adult employees can legally be paid, and minimum pay rates in modern awards.
Awards
Awards are legal documents setting minimum pay and conditions for workers in particular industries or jobs, such as retail, hospitality, nursing, cleaning and construction. There are more than 120 of them.
Around a fifth of Australian employees are paid the award rate. Many others are paid more under enterprise agreements or individual arrangements, but their pay is often linked to award rates indirectly.
What the commission considers
By law, the commission must consider a range of factors, including the performance and competitiveness of the economy, productivity, business viability, inflation, employment growth, the needs of the low paid, and gender pay equity.
In recent years, it has given more weight to the cost of living, after inflation surged and real wages fell.
Recent decisions
The commission awarded large increases after the inflation spike, including 5.75% in 2023. In June 2026, it awarded a 4.75% increase to the minimum wage and award wages, from 1 July.
The commission has also been reviewing pay in female-dominated industries, such as aged care and early childhood education, as part of efforts to reduce the gender pay gap.
The debate
Unions argue minimum wage workers need bigger increases to keep up with the cost of living, especially rent and food.
Employer groups, particularly small business, argue big increases raise costs, can lead to fewer jobs or hours, and could add to inflation.
Economists are divided on how much minimum wage increases affect employment. Research in Australia and overseas has generally found modest increases have limited effect on jobs, but larger rises could have more impact.
Other protections
The Fair Work Ombudsman enforces workplace laws, including making sure workers are paid correctly. Wage theft, deliberately underpaying workers, became a criminal offence at the federal level from 2025.
