From the first full pay period on or after 1 July 2026, Australia’s minimum wage and modern award pay rates increased by 4.75% following the Fair Work Commission’s Annual Wage Review.

For many small and medium businesses, updating payroll for employees paid exactly at the award rate may be relatively straightforward. But what about everyone else?

If your employees are paid above the award rate or covered by an Enterprise Agreement, now is the perfect time to ask an important question:

 Are you certain they are still being paid correctly?

Paying “Above Award” Does Not Always Mean You Are Compliant

One of the most common misconceptions we see is that paying an employee more than the minimum award rate automatically means the business is meeting all its legal obligations.

Unfortunately, that is not always the case.

As award wages increase, so do many of the entitlements linked to them, including:

• overtime rates;
• penalty rates;
• allowances;
• casual loading; and
• annual salary offset calculations.

An employee earning what appears to be a generous salary may still be underpaid if their overall remuneration no longer covers everything they are entitled to receive under the relevant modern award.

That is why it is important to review your payroll whenever minimum wage rates change—not only for employees paid at the award rate, but for anyone whose remuneration is intended to compensate for award-based entitlements.

 What If You Have an Enterprise Agreement?

If your business operates under an Enterprise Agreement, it is also worth reviewing your pay rates, classifications and payroll arrangements following the Annual Wage Review.

Enterprise Agreements establish their own minimum rates and conditions. However, they must continue to operate within Australia’s workplace relations framework and satisfy applicable minimum standards.

Changes to modern award rates provide a timely opportunity to confirm that:

• Enterprise Agreement rates remain compliant;
• employees are correctly classified;
• payroll settings reflect the current agreement;
• allowances and penalties are being applied correctly; and
• remuneration arrangements remain appropriate.

 Why It Matters

Wage underpayments continue to be one of the most common workplace compliance issues identified by the Fair Work Ombudsman.

Employers who underpay employees may be required to:

• repay outstanding wages and entitlements;
• correct payroll errors and employment records;
• respond to Fair Work Ombudsman investigations; and
• face significant civil penalties where workplace laws have been breached.

Beyond the legal and financial risks, underpayments can damage employee trust, workplace culture and your business’s reputation.

The good news is that many underpayments are preventable through regular payroll, award and classification reviews.

A Simple Compliance Check Could Save You Thousands

Following each Annual Wage Review, businesses should consider reviewing:

• award coverage;
• employee classifications;
• wage and salary rates;
• allowances, overtime and penalty rates;
• annual salary arrangements;
• Enterprise Agreement obligations; and
• payroll system updates.

A targeted review now can help identify errors before they develop into expensive and time-consuming problems.

 How Capture Culture Can Help

Navigating modern awards, Enterprise Agreements and workplace legislation can be complex but you do not have to manage it alone.

At Capture Culture, we work with businesses of all sizes to make workplace compliance practical and easy to understand.

Whether you need a payroll health check, award interpretation, classification review or assessment of your Enterprise Agreement, our workplace relations specialists can help you identify and address risks before they become costly.

Not sure whether your payroll remains compliant following the 1 July wage increase?

Now is the ideal time to undertake a Payroll Compliance Health Check.

Getting it right is not only about avoiding penalties. It is about protecting your business, supporting your people and having confidence that you are meeting your obligations under Australia’s workplace laws.