Who Is Eligible For 3.5% Minimum Wage Rise In Australia?

The Australian Fair Work Commission has announced a 3.5% increase to the national minimum wage to

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support low pay workers amidst rising living cost...

Who Is Eligible For 3.5% Minimum Wage Rise In Australia?
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Gemma Davis
Updated: Tuesday 24th of June 2025
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The Australian Fair Work Commission has announced a 3.5% increase to the national minimum wage to support low pay workers amidst rising living costs. High inflation levels in the past few years had increased pressure on employees dependent on minimum wages. With purchasing power going down for this segment of the population, living standards had started to deteriorate. It indicated that the real value of wages had gone down for low paid employees, creating an economic challenge for the country. Thus, the FWC decided to make a positive change to maintain the momentum of the labour market and unemployment rate.

The minimum wage rise will take effect from the first full pay period on or after 1 July 2025. The decision, announced following the 2024-25 Annual Wage Review, is expected to benefit approximately 2.9 million Australian workers. This marks the third consecutive annual increase under the Albanese government that exceeds the inflation rate. It will contribute to efforts to deliver real wage growth to employees in vulnerable wage brackets. Let us understand this rule in detail and its eligibility factors.

1. Key Details of Minimum Wage Hike

Key Details of Minimum Wage Hike

Starting from July 2025, the National Minimum Wage will rise from $24.10 per hour to $24.95 per hour. Although the difference is only 85 cents, it offers a weekly increase from $915.80 to $948.00 to a full time employee working 38 hours per week. The annual minimum wage will be just over $49,296 for these workers.

In addition to the national wage floor increase, award wages across more than 100 modern awards will also rise by 3.5%. This covers sectors like construction, cleaning, childcare, elderly care, retail, and hospitality. Many of them have a large number of female employees as well as casual and part-time employees. It will help increase the number of women join the workforce and strengthen the labour market.

2. Eligibility for Minimum Wage Rise

The wage rise will benefit two major categories of workers

  • National Minimum Wage Earner

These employees are not covered by an award or an enterprise agreement. They will now earn a base rate of $24.95 per hour.

  • Award Covered Workers

Employees who work under industry specific awards will receive a 3.5% pay rise. These awards cover roles in healthcare, education, manufacturing, hospitality, and various service sectors.

Collectively, the increase affects nearly 2.9 million workers, making it one of the most extensive wage adjustments in recent years. Many of the beneficiaries are casual and part time workers. It includes students and migrants working in entry level or lower skilled positions.

3. Business Groups Express Caution

While workers and unions have welcomed the decision, some business groups have expressed concern. Small businesses said they are still recovering from the post pandemic challenges. Entrepreneurs in Sydney, the most prolific commercial hubs in the country, have showcased a mixed reaction and indicated a decline in profit margins. Conversely, many aspiring entrepreneurs seeking businesses for sale Sydney are content about the fact that the wage hike will boost consumer spending.

The Australian Chamber of Commerce and Industry (ACCI) acknowledged the need to support workers. However, warned that increasing wage costs might force small businesses to reduce hours, lay off staff, or raise prices.

“Many small operators are already grappling with thin margins, staff shortages, and interest rate pressures,” said an ACCI spokesperson. “While we support fair pay, this increase will be difficult for some businesses to absorb.”

Despite this, the government maintains that supporting wage growth is essential for sustainable economic recovery and long term workforce retention.

4. A Win For Low Pay Workers

A Win For Low Pay Workers

Minister of Employment and Workplace Relations, Amanda Rishworth, welcomed the announcement, calling it a “significant and fair outcome” for Australia’s lowest paid workers. “This decision delivers real wage growth and helps workers keep up with the cost of living,” she said in a statement. “It is recognition of the vital role these workers play in our economy, from hospitality and aged care to retail and cleaning.”

Treasurer Jim Chalmers echoed her sentiments, adding that the wage rise is “good for workers and good for the economy.” “These pay rises support spending in local communities and help ease pressure on household budgets, especially for workers who have carried us through the pandemic and economic uncertainty,” he said.

5. Cost Of Living and Economic Context

This wage increase is coming in a climate of reduced inflation in Australia. The annual inflation rate was 2.4% in March 2025. The Reserve Bank of Australia has an annual inflation target band between 2% and 3% (including the current 2.4% inflation rate). With the 3.5% wage rate increase, workers on minimum wages will enjoy a real pay rate increase of approximately 1.1%. This will allow their wages to grow faster than inflation for the first time in several years.

While energy, rent, and grocery prices remain high, the wage adjustment aims to provide relief to low income households. It is also expected to stimulate consumer spending, a crucial factor in maintaining economic stability. It has increased the excitement levels of budding entrepreneurs looking for businesses for sale in Sydney and other capital cities. They are gearing for high levels of sales for quick growth in a strong economy.

6. When Does the Increase Apply

The new minimum and award wages take effect from the first full pay period commencing on or after 1 July 2025. This means if a worker’s pay cycle begins on 1 July, the new wage rates apply immediately. However, if the cycle starts later, say on July 4, the new pay rate takes effect from that day.

Employers are legally required to implement the new rates from the correct date. Workers are encouraged to verify their pay changes. They also seek assistance from the Fair Work Ombudsman if they encounter discrepancies.

7. Broader Wage Strategy

Broader Wage Strategy

This minimum wage rise is part of the Albanese government’s broader effort to restore real wage growth after nearly a decade of stagnation. It follows:

  • A 5.2% increase in 2022
  • A 3.75% rise in 2024
  • And now 3.5% in 2025

The government has also made targeted investments in gender equality, superannuation reform, and workplace bargaining reforms. These initiatives are all aimed at improving conditions for lower and middle income earners and increasing consumer spending that will boost the retail industry.

According to Minister Rishworth, “We are building an economy that works for everyone, not just those at the top.”

8. What Should Workers Do

If you're one of the nearly 3 million workers impacted:

  • Review your payslip in July to ensure the correct increase is reflected.
  • Discuss changes in hourly rates, weekend loadings, or overtime adjustments with your employer.
  • If you're unsure or underpaid, contact the Fair Work Ombudsman or your union.

The increase also underscores the importance of understanding your employment rights. It is particularly for young workers, migrants, and casual employees, who are often more vulnerable to underpayment.

Wrapping Up

The 3.5% minimum wage rise carries significant weight in addressing income inequality and supporting households with low income. It reflects a careful balance between worker welfare and business sustainability. It also sends a clear signal that Australia is committed to fair, progressive wage policies. For millions of workers, this is not just a pay bump. This is another big step towards financial stability and recognition of their role in keeping the nation running.

Author Info
Gemma Davis

Gemma Davis is a Business Strategist with over 20 years’ experience and a CPA qualification in finance, accounting and business. She has been a source of inspiration to budding entrepreneurs and has guided them to reach the next level in their business growth plans. With her experience and expertise, she can help you to choose the right path and overcome all the hurdles in your journey as an entrepreneur. Her affiliation with Business2sell is a matter of pride for us.

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