The award wage increase on 1 July: how to budget for it, and when to hire

Every 1 July, the pay rates for most Australian employees go up, and most owners find out the size of the increase about four weeks beforehand. That’s not enough time to build a budget, but it’s plenty of time to be caught short.

This guide works the other way round. It prices the rise in dollars, shows why hiring early doesn’t avoid it, and sets out a cash rhythm so the first pay runs of the new financial year don’t squeeze you.

Can I avoid the 1 July wage increase by hiring early?

No. The increase applies to every employee covered by a modern award, whenever they started. The Fair Work Commission’s 2026 review raised award minimum rates by 4.75%, and the new rates apply from the start of each employee’s first full pay period on or after 1 July 2026, as the Fair Work Ombudsman explains. The National Minimum Wage went to $26.44 an hour.

So a person hired on 15 June is on the old rate for a few weeks and the new rate after that. Hiring early buys you the person, not the price.

Two details matter for the timing:

• “First full pay period” is employee by employee. A business on fortnightly pay can have staff whose pay periods begin on different dates, so the rise doesn’t hit everyone on the same pay run.
• Over-award staff may not move. The obligation is to pay at least the minimum. Whether an over-award rate absorbs the increase depends on the contract.

How much does the wage increase cost in dollars?

Take your award-rate wage bill, multiply by the percentage, then add super. Skip the on-cost and your budget is about 12% short.

Illustrative only: invented figures, no real business. Wages are before other on-costs such as workers compensation premiums.

A small business has eight award-covered staff with a combined annual ordinary wage bill of $400,000.

Item	Annual cost
Wage increase at 4.75%	$19,000
Super on the increase at 12%	$2,280
Total extra per year	$21,280
Extra per month	about $1,773

If one of those eight earns $30 an hour for 38 hours a week, that’s $59,280 a year. The rise adds about $2,816 in wages and $338 in super, roughly $3,154 for that one person. Quotes, rosters and prices all need to carry it.

Use your own payroll report. Split the wages into award-rate, over-award and owner drawings, because only the first group is certain to move.

When should I start setting the money aside?

Start in the second half of the year, not in June. The decision usually arrives in early June, so the number is unknown until about four weeks before it applies. The sensible habit is to budget a cautious figure, then true it up when the decision lands.

A workable sequence:

1. January to March: work out your award-rate wage bill and put a placeholder increase on it. Use last year’s percentage as a rough guide.
2. April and May: set aside one-twelfth of the placeholder each month, so the cost has a home before it arrives. Our EOFY 2027 countdown lays out the same months for purchases and cash.
3. Early June: when the decision is published, replace the placeholder with the real percentage and check your award’s pay guide.
4. Before the first July pay run: update payroll software, quotes and price lists. A rate that isn’t updated is a back-payment later.
5. July: watch the first two pay runs against budget, because Payday Super also changes when super leaves the account.

Payday Super started on 1 July 2026. The ATO says super must reach the fund within 7 business days of payday. The higher wage and the new super rhythm arrive together, so the first July pay runs are where a thin buffer shows up. Our page on what rises on 1 July covers the other costs that move at the same time.

Should I hire before or after 1 July?

The wage rise isn’t a good reason to hire early or late. The question is what the role earns.

Hire before 1 July when:

• you’re already turning work away and the role would bring in more than it costs;
• the peak is close and training takes weeks (see when to hire now or wait);
• you can fund the first three months of wages without a squeeze.

A rough test: if the new person generates more gross margin each month than the extra 4.75% costs across the year, the rise is a rounding error against the cost of the empty seat. For the $59,280 role above, the rise is about $263 a month including super. A role that adds a few thousand dollars of margin a month isn’t in doubt.

Wait until after 1 July when:

• the new rate would make the role unprofitable at your current prices, and you need a price rise first;
• demand is a spike, not a trend;
• the quiet months are about to start and the person would be paid to wait for work.

Waiting has its own bill. Work turned away doesn’t come back, as our page on turning away work shows. If the unfilled role costs you a few jobs a month, hiring in May beats hiring in August every time.

How do I price the increase into jobs and quotes?

Labour is rarely just one line, so work out what share of each job or sale is award-rate labour. If wages are 35% of what you charge, a 4.75% rise adds roughly 1.7% to your cost per job before super (35% × 4.75%). That’s small on one invoice and large across a year.

Three habits stop the rise eating margin:

• Check every quote that runs past 1 July. Anything quoted in May at the old rate and delivered in July carries the new cost. Add a line to quotes that labour is priced at current rates.
• Move price lists in the same week as payroll. Customers accept a July price update more readily than a mid-year one, because suppliers are doing the same.
• Look at hours, not just rates. Rosters that match staffing to the real trade pattern often save more than the rise costs.

What does a cash squeeze in July actually look like?

Two things stack: higher wages in the first pay run, and super that now flows each pay cycle rather than quarterly. Add in 1 July supplier price changes and an end-of-year tax bill, and cash can look thin in the same fortnight.

The signs to watch:

• the operating account falls below one full pay run plus super;
• customers are paying slowly, so the cash you expected hasn’t arrived;
• a big purchase is also scheduled for June.

If it’s coming, deal with it in April, not July. A buffer or a line of credit arranged while the business looks healthy is a lot easier than one arranged under pressure. It helps to know your options before you need them, and if the wages are the only gap, a smaller facility sized to that gap usually beats a larger one. See how the cost of waiting adds up to compare the cost of a facility with the cost of doing nothing.

When is waiting the smarter call?

Sometimes the right move is not to borrow and not to hire yet:

• Your award-rate wage bill is small and a few hundred dollars a month is absorbed by margin.
• You haven’t priced the rise into your own prices yet. Fix that first, because the rise is permanent and the discount you give today is hard to take back.
• The new role depends on a contract that isn’t signed.
• You have a comfortable buffer, and cash will carry the first quarter.

Borrowing to cover a recurring cost is a poor trade unless it buys something that earns the cost back. For a wage rise, the real fix is price and productivity. Finance bridges a timing gap; it doesn’t close a margin gap.

Next step: make sure July is a non-event

If the 1 July numbers show a gap, or you want a buffer in place before the next decision lands, it’s worth having a conversation early. When you see if you qualify, the enquiry takes about 60 seconds, and there’s no credit check just for asking, so your credit file stays as it is. We don’t send your details to a pile of lenders. A real person reads your situation, then calls you to talk through what makes sense for your timing. Please fill the form in accurately, so the first option we suggest fits.

See if you qualify →