Two pay cycles into the new award rates: the pay-run check worth doing now

The wage increase took effect from your first full pay period on or after 1 July 2026, and if a rate, allowance or classification was missed, you are now a couple of pay cycles into an error that keeps compounding.

Do this before your next pay run

Pull your first pay run from July, your most recent one, and check the base rate for every employee against the award and classification level you have them on. That single comparison catches most of what goes wrong.

The reason to do it now rather than in June next year is arithmetic. The increase applied from the first full pay period starting on or after 1 July 2026, so by early September most employers have run several pay cycles on the new rates. A rate that was five dollars a week short in July is five dollars a week short every week since, for every employee on that classification.

The Fair Work Ombudsman said on the day the change started that employers must ensure eligible employees receive the correct minimum wage increase from that first full pay period. That is the check, and it is on you to have done it.

What the new floor is

The National Minimum Wage is now $1,004.90 per week or $26.44 per hour. That figure only applies to employees not covered by an award or agreement, which in most businesses is nobody or almost nobody.

If your people are covered by a modern award, the number that matters is the award minimum for their classification, which also went up in the same decision. Award minimums rose by 4.75%, as reported by the Sydney Morning Herald when the decision came down in June.

Where the errors usually sit

Not in the base rate. Payroll software often pushes the headline rates through automatically, and that is exactly what lulls people into skipping the check.

The gaps tend to be in the things attached to the base rate: casual loading, weekend and evening penalty rates, overtime, allowances calculated as a percentage of a standard rate, junior rates and apprentice rates. If any of those are hard-coded as dollar amounts in your system rather than derived from the current base, they did not move on 1 July.

The other common one is classification. An employee who took on more responsibility during the year may now sit at a higher level in the award than the one they were hired at, and the July increase applies to the level they should be on, not the one on file.

Verify rates against the Fair Work Ombudsman's free Pay and Conditions Tool rather than against last year's spreadsheet. It is the government's own calculator and it settles arguments quickly.

If you find a shortfall

The Fair Work Ombudsman's published guidance for employers who have underpaid someone is to talk to the employee, explain what happened and how the amount was worked out, and pay the shortfall as soon as possible, either in the next pay cycle or as a separate payment. Straightforward, and better than a discovery months later.

There is a reason the regulator writes it that way. Since 1 January 2025, intentional underpayment of wages or entitlements can be a criminal offence under the Fair Work Act. The distinction the law draws is between a mistake you find and fix and a decision you make. For employers with fewer than 15 employees, the Voluntary Small Business Wage Compliance Code means the Ombudsman cannot refer them for criminal prosecution over an underpayment if satisfied the employer complied with the Code.

Write down what you checked

Unpaid or underpaid wages can be pursued for up to six years from the date of the contravention, and time and wage records must be kept for at least seven years. Those two numbers are the reason a self-audit is worth documenting, not just doing.

A short note of what you checked, when, which rates you compared against and what you found is a record of a reasonable employer acting reasonably. Keep it with the pay records, alongside the pay slips and time and wages records you already have to hold.

If the check comes back clean, you have spent an hour and gained a dated record. If it does not, you have found it at two pay cycles instead of twenty.

Sources

• https://www.fwc.gov.au/work-conditions/minimum-wages-and-conditions/national-minimum-wage
• https://www.fairwork.gov.au/about-us/workplace-laws/annual-wage-review/annual-wage-review-2026
• https://www.fairwork.gov.au/newsroom/media-releases/2026-media-releases/july-2026/20260701-minimum-wage-increase-media-release
• https://www.smh.com.au/business/workplace/fair-work-commission-lifts-minimum-wage-by-4-75-per-cent-20260602-p602zn.html
• https://calculate.fairwork.gov.au
• https://www.fairwork.gov.au/workplace-problems/common-workplace-problems/i-think-ive-underpaid-my-employee
• https://www.fairwork.gov.au/about-us/workplace-laws/legislation-changes/closing-loopholes/criminalising-wage-underpayments-and-other-issues
• https://www.fairwork.gov.au/about-us/compliance-and-enforcement/criminal-prosecution/voluntary-small-business-wage-compliance-code
• https://www.fcfcoa.gov.au/gfl/fairwork-small-claims
• https://www.fairwork.gov.au/tools-and-resources/fact-sheets/rights-and-obligations/record-keeping-pay-slips

This guide is general information, not legal advice. Requirements change and the detail of your situation matters, so check the current guidance at fairwork.gov.au or get advice before acting on a specific case.

If sitting down with the award, the classifications and the last two pay runs is one of those jobs that keeps sliding, that is exactly the kind of thing People Management Partners sets up for small and medium businesses.