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NEW AUSTRALIAN FINANCIAL YEAR 2025-2026: ACTIONS FOR EMPLOYERS

Date: July 7, 2025

·       The Fair Work Commission (FWC)’s decision on minimum pay increases the national minimum wage and minimum modern award wages by 3.5%.

·       The high income threshold is $183,100 effective from 1 July 2025.

·       The superannuation guarantee rate is 12% effective from 1 July 2025.

·       The right to disconnect applies to small business employers from 26 August 2025.

ISSUE 1: INCREASE TO AUSTRALIAN NATIONAL MINIMUM WAGE AND MODERN AWARD RATES

The FWC’s annual wage review decision increases the national minimum wage and minimum pay rates under modern awards by 3.5%.  The weekly national minimum wage is $948 per week (based on a 38 hour week), or $24.95 per hour with effect from 1 July 2025.

In support of its decision, the FWC stated as follows: “We are satisfied that the level of wage increase we have determined is sustainable. The labour market remains strong overall, with continuing employment growth, low unemployment and historically high rates of participation in the workforce. Reductions in interest rates are likely to lead to higher consumer demand and a higher level of economic growth than we have experienced in recent years. Although business has faced challenging circumstances in recent times, business conditions have remained reasonably healthy, with the level of non-mining profits maintained in real terms and profit margins at approximately their pre-pandemic level” – see Annual Wage Review 2025 [2025] FWCFB 3500 (3 June 2025)

ISSUE 2: INCREASE TO HIGH INCOME THRESHOLD

The high income threshold is $183,100 with effect from 1 July 2025.  Provided that certain other requirements are met, employees earning below the high income threshold can make an unfair dismissal claim if dismissed.  However, employees earning above the high income threshold are not precluded from making an unfair dismissal claim on the basis of their earnings if they are covered by a modern award or enterprise agreement.

The unfair dismissal compensation cap is $91,550 from 1 July 2025.  The maximum amount that the FWC can order for unfair dismissal is the lower of: (a) half the employee’s annual earnings; or (b) the compensation cap.

ISSUE 3: INCREASE TO MINIMUM AUSTRALIAN SUPERANNUATION CONTRIBUTIONS

Employers’ minimum superannuation contribution rates are now 12%.

ISSUE 4: THE RIGHT TO DISCONNECT AND SMALL BUSINESS EMPLOYERS

Having taken effect on 26 August 2024 for larger employers, the “right to disconnect” laws take effect on 26 August 2025 for small business employers.  (A “small business employer” is one that employs fewer than 15 employees, including in any “associated entities”.)

An employee may refuse to monitor, read or respond to contact, or attempted contact, from their employer (or a third party in relation to their work) outside of the employee’s working hours unless the refusal is unreasonable.

In determining whether any refusal by an employee is unreasonable, but without limiting what other factors might also be relevant, the following must be taken into account: “(a) the reason for the contact or attempted contact; (b) how the contact or attempted contact is made and the level of disruption the contact or attempted contact causes the employee; (c) the extent to which the employee is compensated: (i) to remain available to perform work during the period in which the contact or attempted contact is made; or (ii) for working additional hours outside of the employee’s ordinary hours of work; (d) the nature of the employee’s role and the employee’s level of responsibility; (e) the employee’s personal circumstances (including family or caring responsibilities)”.

CONTACT

Please contact us if your organisation requires assistance with employment law or industrial relations matters.

Whitehall Workplace Law

Level 14, 330 Collins Street, Melbourne, VIC 3000

T +61 (0)3 8605 4841 / M +61 (0)428 041 272

This publication is for general reference purposes only.  It does not constitute legal advice and should not be relied upon as such.  Specific legal advice should always be obtained before taking any action based on this publication.  Liability limited by a scheme approved under professional standards legislation.