The Fair Work Commission has handed down its wage decision. Neither workers nor business owners got exactly what they wanted.
Wage decisions rarely please everyone, and the Fair Work Commission’s 2026 Annual Wage Review is no exception. A 4.75% increase to the national minimum wage and modern award wages from 1 July was lower than some worker advocates sought and higher than some employer groups hoped for. In that narrow middle ground sits close to 2.8 million Australians and the businesses that employ them.
Ciaran Hale, CTO at Deputy, a workforce management platform used widely in Australian hospitality and retail, offered one of the more honest assessments of what the number actually means in practice.
“It carries real upside, and some real challenges, on both sides of the roster,” he said.
That framing, real upside and real challenges simultaneously, is worth sitting with. Because the 4.75% decision is not a clean win or a clean loss for either side. It is a calibrated number in an economy where the ground has shifted significantly since the last time wages and costs were in balance.
The real wage gap that persists
For the workers the decision affects most directly, the 4.75% increase is welcome but incomplete. The Commission directed the largest gains toward the roughly 100,000 lowest-paid workers in the system, disproportionately women, casuals and part-timers in hospitality, retail and care. That targeting is deliberate and meaningful.
But the rise keeps pace rather than gets ahead. Award wages will still sit below their real 2021 value following this decision. Closing that gap entirely would have required an increase of over 5%. For workers whose household budgets have been stretched by fuel prices, rent and grocery inflation running ahead of headline CPI, the difference between a 4.75% rise and a full catch-up is felt in real and daily ways.
Hale was direct about this. “With fuel and essentials running ahead of headline inflation, many shift workers will feel that gap,” he said. He also flagged something that receives less attention in wage decision coverage: the accuracy of payroll itself. “Take-home pay in shift work depends heavily on penalty rates and overtime being calculated correctly. Workers shouldn’t have to chase what they’re owed.”
That is a pointed observation. A 4.75% increase in the base rate means nothing to a worker whose penalty rates are being calculated incorrectly, underpaid or missed entirely. For small business owners, accurate payroll is not just a compliance obligation. It is a direct component of whether workers actually receive what the Commission intended.
Where the pressure lands hardest
For business owners, the decision arrived at 4.75% rather than the higher figure some employer advocates had feared, and there is genuine value in that predictability. Planning for a known number, even a challenging one, is easier than planning for uncertainty.
But the number still lands hardest in the sectors where margins have the least room to absorb it. In hospitality and retail, wages already represent a large share of every revenue dollar. A near 5% increase in the labour component of costs, arriving in a year of reduced consumer spending, elevated input costs and sustained fuel price pressure, is a genuine planning challenge rather than a line item adjustment.
“In cafés and restaurants, a 4.75% wage rise is a genuine planning challenge,” Hale said. “The Commission listened, settling on 4.75% rather than the higher figure some advocated for. There’s real value in that predictability. But the increase still lands hardest where margins are thinnest.”
The practical response for business owners is to model the dollar impact on their specific wage bill now, before July, rather than discovering the full effect in the first pay run of the new financial year. A 4.75% increase applied across a full roster of casuals, part-timers, juniors and full-timers, each on different classifications and penalty rate structures, will produce a different total cost depending on the mix of hours and roles in each business.
What July 1 actually looks like for a small business
The wage increase does not arrive alone. From 1 July, Payday Super requires superannuation to be paid on every payday rather than quarterly. New award classifications take effect. Phased changes to junior pay rates begin, with further adjustments due through to December. Each of these changes applies across every shift and every pay run from the first day of the new financial year.
Hale described the cumulative effect plainly. “New rates, restructured classifications and phased junior rate changes create real complexity between now and December. Small operators have to get it right across every shift and every pay run. It’s a complicated decision in a complicated year.”
For small business owners who have not yet mapped the specific changes applicable to their modern award, the Fair Work Commission publishes updated pay guides for each award following the Annual Wage Review decision at fairwork.gov.au. Those guides are the authoritative source for the rates, classifications and junior pay changes relevant to your specific business and workforce.
The weeks between now and 1 July are the window to get this right. Not because the ATO or Fair Work will be watching from day one, but because the businesses that absorb this complexity with preparation will be in a better position than those that discover it mid-pay-run.
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