Employment changes from 1 July 2026: Minimum wage rates, unfair dismissal thresholds, new payday super rules and more

Employers in Australia will be impacted by a number of changes to minimum rates of pay, thresholds and entitlements, commencing on 1 July 2026. Below is a summary of the key changes and what they may mean for employment conditions, superannuation obligations and your workplace more broadly.

Increase to the minimum wage

Following the Fair Work Commission's Annual Wage Review 2026 decision, minimum modern award rates and the national minimum wage will increase by 4.75%. The increase applies from the first full pay period starting on or after 1 July 2026.

For employees who are not covered by a modern award or enterprise agreement, the national minimum wage will increase to $26.44 per hour, or $1,004.90 per week based on a 38-hour week. For casual employees, the new national minimum wage will be $33.05 per hour (which includes a 25% casual loading).

Employers should check that employees are being paid the correct rate of pay from the first full pay period on or after 1 July 2026. This includes reviewing each employee's award coverage, classification and current pay rate.

The new high income threshold

The new high income threshold for the financial year commencing 1 July 2026 is $190,100 (previously $183,100).

This threshold applies to all employee dismissals that are effected on or after 1 July 2026, as well as to contractors seeking to make an unfair deactivation, unfair termination or unfair contract term claim.

The high income threshold can alter conditions of employment governed by a modern award. Employees earning above the threshold are generally unable to claim unfair dismissal and are also exempt from the general prohibition on fixed-term contracts for a period of more than two years. Learn more

The high income threshold is also relevant if an employer has provided an award covered employee with a guarantee of annual earnings.

Unfair dismissal compensation cap

From 1 July 2026, the new compensation cap for an unfair dismissal claim in the Fair Work Commission is $95,050 (previously $91,550).

This new limit applies to all unfair dismissal claims which are lodged in the Commission on or after 1 July 2026.

The unfair dismissal compensation cap specifies the maximum compensation that can be awarded to an employee who has been unfairly dismissed. It is typically the lesser of half of the high income threshold or 26 weeks of the employee's pay. Learn more

Change in the tax-free component of genuine redundancy payments

For the financial year commencing 1 July 2026, the tax-free component of a genuine redundancy is to be calculated as follows: $13,598 + $6,801 for each completed year of service.

In FY26 this was calculated based on $13,100 + $6,552 for each completed year of service.

Genuine redundancy payments refer to payments received by an employee who is dismissed because the job they were doing is redundant. This means the employee's position is no longer required to be performed by anyone, and this is not due to the ordinary and customary turnover of labour. The tax-free component for a genuine redundancy payment is calculated using a base limit and a service-related component. Any amount over the tax-free component is called an "employment termination payment" (i.e. ETP) and will be subject to different tax rules. Learn more

New payday super rules

From 1 July 2026 employers will be required to pay superannuation contributions at the same time they pay their employees' salaries or wages. Previously this could occur on a quarterly basis. There are some exceptions to this rule (e.g. for new employees), however employers may be exposed to charges and penalties if contributions are not received by employees' super funds within seven business days of each payday. Learn more

Employers are encouraged to review their payroll systems and business processes to make sure they are prepared for these changes.

Superannuation guarantee rate

The superannuation guarantee rate remains at 12% with no existing proposals for this to change.

Maximum superannuation contribution base

The maximum superannuation contribution base for the financial year commencing 1 July 2026 is $270,830 per annum (previously $62,500 per quarter or $250,000 per annum).

The maximum superannuation contribution base is a limit on the contribution an employer is required to make on behalf of an employee under the Superannuation Guarantee Charge scheme in Australia.

With the introduction of payday super, employers must pay an amount on account of superannuation for each payday. However, once an employee has earned the maximum superannuation contribution base within a financial year, the employer is not obliged to make superannuation contributions on the excess. In practice, this new limit means that the maximum superannuation guarantee amount an employer is required to make on behalf of an employee in the 2026-2027 financial year is $32,499.60. This is subject to any other obligations imposed on, or agreed to, by an employer such as by an award or an employment contract. Learn more

Concessional superannuation cap

The new concessional superannuation cap for the financial year commencing 1 July 2026 is $32,500 (previously $30,000).

Concessional superannuation contributions are payments that are made into an employee's superannuation fund before tax. They are called "concessional" contributions because these contributions are taxed at a concessional rate of 15%, which is often lower than the rate paid if the money was taxed as income outside of superannuation. Concessional contributions have a cap, which is subject to change periodically. Learn more

Increase in paid parental leave

From 1 July 2026, the amount of paid parental leave offered by the Federal Government for eligible workers increases from 24 to 26 weeks. Learn more

Superannuation on paid parental leave

From 1 July 2026, the Australian Taxation Office (ATO) will start making superannuation contributions of 12% on Federal Government funded parental leave pay taken in the previous financial year. While the ATO is ultimately responsible for making these contributions to eligible workers, employers should be aware of these amounts given they also count towards the concessional superannuation cap (as discussed above). Learn more

For more information about these changes and how they impact you or your organisation, please contact a member of Lander & Rogers' Workplace Relations & Safety team.