New Financial Year, New Rates: What Changes on 1 July 2026

Written By Alyce Taig

The start of a new financial year is one of the most important moments in the employment law calendar. From 1 July 2026, a range of changes take effect that directly impact what you must pay your employees, how much superannuation you must contribute, and whether your current pay rates remain compliant.

This blog breaks down every key change, so you can update your payroll, brief your managers, and head into the new financial year with confidence.

1.  National Minimum Wage Increase

The Fair Work Commission handed down its Annual Wage Review decision, increasing the National Minimum Wage effective 1 July 2026. This increase flows through to all employees covered by a modern award or the national minimum wage order.

What you need to do:

  • Check the current National Minimum Wage and confirm your lowest-paid employees are paid at or above it.

  • If you pay above the minimum, consider whether your business practice is to maintain a margin above the minimum, if so, you may need to adjust those rates too.

  • Update your payroll system to reflect the new rate from the first pay period on or after 1 July 2026.

  • Keep records of the rate change for compliance purposes.

2.  Modern Award Rate Updates

All modern award pay rates are also updated from 1 July 2026 in line with the Annual Wage Review decision. If your employees are covered by a modern award — and most employees in Australia are — you must be paying at least the updated minimum rates for their classification.

Common pitfalls to avoid:

  • Assuming your employees are not award-covered when they are. When in doubt, check Fair Work's Pay and Conditions Tool (PACT).

  • Forgetting to update penalty rates, overtime rates, and allowances, which also increase proportionally under most awards.

Missing classification changes — an employee's role or responsibilities may mean they should be classified at a higher pay grade.

Not sure which modern award covers your team? The Fair Work Ombudsman's Award Finder tool is a good starting point. If you're still unsure, this is worth getting right, underpayment of award entitlements is a serious compliance risk.

3.  Superannuation Guarantee Rate

The Superannuation Guarantee (SG) rate also increases from 1 July 2026 as part of the legislated pathway to 12%. Employers must contribute the updated SG percentage on eligible employee earnings for each quarter.

Action checklist for super:

  • Update your payroll software to apply the new SG rate from 1 July 2026.

  • Check that your payroll system calculates super on ordinary time earnings correctly. Common errors include excluding certain allowances that should be included.

  • Brief your payroll or bookkeeping team on the change before the first July pay run.

  • Note the quarterly SG payment due dates and ensure funds are paid on time to avoid the Superannuation Guarantee Charge (SGC).

4.  Record-Keeping Obligations

With rate changes comes a reminder that employers must maintain accurate and up-to-date payroll records. The Fair Work Act requires employers to keep employee pay records for seven years. These must include the pay rate applied, hours worked, and super contributions made.

The Fair Work Ombudsman has the power to audit these records and issue penalties for non-compliance, including where records are found to be false or misleading.

5.  What to Prioritise This Week

Here is a simple action list for employers to work through in the first week of July:

  • Confirm the current National Minimum Wage and update payroll accordingly.

  • Find the applicable modern award(s) for your workforce and download the updated pay tables.

  • Update your superannuation contribution rate in your payroll system.

  • Run a test payroll calculation for your first July pay run before processing.

  • Brief your HR, payroll, and finance teams on the changes.

  • Document the changes made for your records.

Navigating payroll compliance at the start of a new financial year can feel overwhelming, particularly when you are also running a business. Element HR can help you conduct a payroll compliance review, update your employment contracts and policies, and make sure your obligations are met from day one.

Get in touch with our team at info@elementhr.com.au or visit www.elementhr.com.au to learn more about how we can support your business.

Alyce Taig