Get Ready to Pay Your Workers the New Minimum Wage

Are you rushing to update your pay rates based on the Fair Work Commission’s minimum wage increase decision? A rise in minimum wages can have a big impact on Australian businesses, and you’ll need to update your payroll software to roll out the changes. By following these steps, you can avoid underpayments and monitor the impact of higher wage costs on your business.

What is the minimum wage?

The minimum wage is the minimum amount that all employees working in Australia can be paid for their work. Outlined in the Fair Work Act (2009), it undergoes annual review and adjustment to ensure that low-income workers can earn a fair living wage and support a basic standard of living.  

The Fair Work Commission reviews the National Minimum Wage and minimum rates of pay in modern awards annually. This often occurs between March and June, with any changes typically coming into effect in the first full pay period on or after July 1.

What is the new minimum wage?

The Fair Work Commission recently decided to increase the National Minimum Wage and all modern award minimum wages by 3.5%, effective from July 1, 2025. This means that the National Minimum Wage will increase to:  

• $948 per week, or 
• $24.95 per hour. 

This decision was made to improve the living standards of employees who are dependent on minimum and modern award wages. Many have experienced greater difficulty in meeting their everyday needs in a period of high inflation. 

How to increase the minimum wage in your workforce:

If you pay employees the National Minimum Wage or the minimum rates of pay in modern awards, then you will need to apply the increase in your payroll system. Wage costs are often one of the biggest costs of doing business, so you should also track the impact of the increase on your margins and operations. 

Here are some steps you can take to roll out the changes.

Step 1: Update your pay rules

Make sure you’re applying the right increase to the right award rules and employee positions in your payroll software. foundU has a powerful award interpretation engine and configurable rules that let you set the right pay and entitlements for all positions across your workforce.  

You can also use the minimum wage increase tool to set the increase and effective date for specific awards. Wait for the pay guides to be released so you can get the new wage correct, right down to the decimal point. 

If you have salaried award-covered employees or employees whose base rates of pay are determined by an enterprise agreement, then you should check if they continue to be better off than the new base rate of pay under the award. Your review should also include the wage rates of part-time, full-time, and casual employees.  To run your better off overall calculations in a variety of scenarios, you can use foundU’s award test tool.

Step 2: Schedule the increase

Check the effective date of the minimum wage increase. In 2025, the new minimum wage is effective on July 1 and should apply in the first full pay period in the new financial year.  

Before setting up the effective date in your payroll software, you should be able to answer the following questions:  

• What is the date of the minimum wage increase? 
• Do you pay weekly, fortnightly, or monthly? 
• What are the dates of your first full pay period after the increase comes into effect? 
• What day do you process pay? 

Using foundU, you can schedule the effective date in advance and have peace of mind that the new pay rates will apply at the right time. 

Step 3: Examine the impact on your wage costs

The increase in the minimum wage could affect your wage costs. Using foundU, you can schedule your wage increase and then see how this will impact your wage costs in future rosters and wage cost reports.  

This will help you make the right staffing decisions as the new rates take effect. It will also empower you to set the right price for your products and services while creating stability for your employees as the increased pay rates kick in.

Step 4: Keep your workforce updated

Make sure you communicate the changes to your employees, so they know that they are being paid according to their legal rights. The National Minimum Wage increase decision often receives a lot of media coverage and they should be aware of their new entitlements.  

If you need support in communicating the change to your workforce at scale, then you can use foundU’s employee app and workforce communication tools to share the message. Employees will also be able to download their pay slips via the employee app to check that their pay aligns with the new requirements.

Navigating minimum wage changes

The minimum wage is a powerful tool for ensuring that Australia’s lowest-paid workers can continue to maintain a basic standard of living. It can also have a big impact on your business when it changes. 

With the right payroll software in place, you can stay compliant and keep track of your wage costs during the transition period. 

If you’d like to see how foundU makes minimum wage increases easy, then book a demo with our expert product team.