Are You Ready for the 1 July Award Wage Increase? What You Need to Know for Your Annual Salary Review

As the end of the financial year approaches, many businesses are turning their attention to budgeting and planning — and that often includes an annual salary review. But before you finalise your wage adjustments, it’s critical to consider the upcoming minimum award wage increase, which takes effect from 1 July 2025, as announced by the Fair Work Commission.

Each year, the Fair Work Commission conducts its Annual Wage Review, which affects both the national minimum wage and minimum award wages. For 2025, the increase is 3.5%. T

his increase applies to all employees covered by a modern award, including those paid under annualised wage arrangements.

Why This Matters — Even If You Pay Above Award

If your team members are paid above award rates, you might assume you're in the clear — but that’s not necessarily the case.

Most modern awards include an Annualised Wage Arrangement (AWA) clause. This clause allows employers to pay a fixed annual salary in satisfaction of specific entitlements like overtime, penalty rates, and allowances — but only if the total amount paid is equal to or greater than what the employee would have earned under the award.

Under this clause, employers are required to conduct an annual reconciliation to:

• Compare the total annual salary paid against what the employee would have received under the award

• Ensure employees are not disadvantaged

• Top up any shortfall, if required

This assessment must be completed every 12 months, and also when:

• Annual salary increases are being considered

• Pay reviews occur (e.g. promotions or restructures)

• An employee resigns or transitions out of an annualised arrangement

The Hidden Complexity of Getting It Right

While the requirement sounds straightforward, in practice, it’s highly technical.

Each award includes different rules for:

• Overtime thresholds and rates

• Weekend and public holiday penalties

• Industry-specific allowances (e.g. meal, travel, tools, uniform)

• Breaks and rostering rules

On top of that, every business has its own work patterns, shift structures, and leave policies, all of which can impact how the award provisions apply in real terms.

Getting the reconciliation wrong could lead to underpayment claims, Fair Work audits, and in serious cases, financial penalties and reputation damage.

Best Practice Tip: Build This into Your Annual HR Rhythm

Over the years, I’ve helped many clients navigate the complexities of wage compliance, and have fine-tuned a process that’s both practical and audit-ready.

Whether you handle payroll in-house or through an outsourced provider, I recommend including the annualised wage reconciliation in your salary review cycle — it ensures compliance and gives you peace of mind that your wage decisions are data driven, not just assumptions.

To make this easier, I’ve developed a reconciliation template that can help streamline the process. It includes:

• Award-specific rate comparison fields

• Payroll data inputs

• Summary checks for over/underpayments

If you'd like a copy of the template or need assistance reviewing your wage structure, I’d be happy to help. The cost of getting it wrong far outweighs the effort of getting it right.

Let’s Make Wage Compliance One Less Thing to Worry About

As 1 July draws near, now’s the time to take proactive steps to ensure you’re meeting your obligations — and treating your team fairly. If you’d like a copy of the reconciliation template, or need help interpreting the relevant award for your industry, feel free to reach out.