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The 4.75% increase — what it covers and who it affects.



On 2 June 2026, the Fair Work Commission handed down its Annual Wage Review decision. The principal determination is a 4.75% increase to all modern award minimum wage rates, effective from the first full pay period on or after 1 July 2026.

This increase applies across all 120+ modern awards in the national system. Approximately 2.8 million employees - 21.1% of the Australian workforce are paid at an applicable minimum wage rate under a modern award and are directly affected.

Who is most directly exposed?

The FWC identified four industry divisions that account for over two-thirds of all modern award-reliant employees:

•  Accommodation and food services
• Retail trade
• Administrative and support services
• Health care and social assistance

For employers in recruitment and labour hire - who place workers across many of these sectors simultaneously — the 4.75% increase flows through to every active placement, every quoted rate, and every contract priced on award rates. The compliance obligation is not singular. It is multiplied across every worker, every award, and every client engagement.

The increase applies to base rates. Casual loading, penalty rates, allowances and overtime are then calculated on top of the new base — meaning the dollar impact compounds upward through the full employment cost structure.

Effective date: The increase applies from the first full pay period on or after 1 July 2026. If your business runs fortnightly pay cycles, the new rates must apply from the first full fortnight that begins on or after 1 July - not necessarily from 1 July itself. Check your pay period start date.



The C13 structural change - the story inside the headline

The 4.75% general increase is the headline. But it is not the whole story.

Alongside the general increase, the FWC made a structural adjustment to the two lowest classifications in the modern award system — C13 and C14. Understanding this adjustment is essential for any employer with workers at or near the award minimum, and for any recruitment or labour hire business quoting on those rates.

What are C13 and C14?



Modern awards use a classification hierarchy, a numbered scale that reflects skill levels and experience. The C classification scale originated in the Manufacturing and Associated Industries Award but its rates serve as reference points across the broader award system.

C13 and C14 classifications or their equivalents under different naming conventions - appear across many awards beyond manufacturing. Equivalent entry-level and base-rate classifications are found in the Hospitality Industry Award, the General Retail Industry Award, the Cleaning Services Award, the Horticulture Award, and dozens of others.

What the Commission decided about C13

The FWC determined that the gap between C13 and C12 is too wide — that the lowest ongoing employment rate in the system sits too far below the next level up. It has decided to close that gap progressively, over three Annual Wage Reviews:

This is a three-year structural reform. The C13 classification will not exist after the 2028 Annual Wage Review. For employers with workers at the base award rate, this means above-general increases at each of the next two Annual Wage Reviews — not just this one.

The maths - shown plainly

The mechanism the FWC used to calculate the C13 increase is straightforward:

What about C14?



The FWC decision is explicit: C14 rises by the same percentage as C13. This is to maintain its current relativity to the C13 rate.

IMPORTANT: C14 does NOT increase by 6.8% or any other figure. The FWC decision confirms explicitly that C14 rises by the same percentage as C13 — 6%. Any secondary source citing a different figure should be disregarded. All figures in this guide are sourced directly from [2026] FWCFB 3500.

What this means for recruitment and labour hire.

For recruitment agencies and labour hire operators, the 2026 rate changes create a specific set of obligations that go beyond standard payroll compliance. The nature of the business — placing workers across multiple clients, multiple awards, and multiple classification levels — means the margin for error is multiplied.

The quoting problem

Every client quote built on award rates is affected by the 1 July increase. Any quote produced before 2 June 2026 was built on rates that are now out of date. But the problem is more specific than a general rate update:

•  A quote built on a flat 4.75% increase for C13-classified workers is $0.36/hr per worker short of the actual obligation
• A quote built on C14 rates for a placement that runs longer than 6 months will face a mandatory reclassification to C13 mid-contract a built-in cost increase the quote may not have accounted for
• A long-term contract (12 months or more) that covers C13-classified workers will face Stage 2 of the phase-out at the 2027 Annual Wage Review another above-general increase before the contract expires

The C14 tenure clock

This is one of the most practically significant and least discussed compliance obligations for labour hire businesses.

C14 is a transitional rate. It can only apply for a maximum of six months from the commencement of employment. After that, the worker must be reclassified to at least C13.

For a business managing a high-volume placement pool, this creates a rolling reclassification schedule a calendar of dates on which specific workers must receive rate increases, regardless of whether the client contract has been repriced.

If you have placed workers on C14 rates and quoted the client at C14 rates for the full placement duration, the cost of the mandatory C14-to-C13 reclassification at the 6-month mark sits with your business — not the client — unless your contract has a specific provision for it.

The above-award false comfort

A common response to compliance questions is: "We pay above award, so we're covered."

This is true, but only if the base rate calculation is correct. Above-award simply means the total payment exceeds the current award minimum. If the award minimum increases and the payment doesn't, the arrangement may no longer be above award.

Above award is a buffer. It is not a bypass. It does not remove the obligation to know what the award rate actually is.

The contract renewal trap

Labour hire and recruitment businesses typically work on 12-month contracts with clients. Contracts priced before 2 June 2026 were built on pre-increase rates. Whether those contracts allow for rate escalation when award rates change depends entirely on how the contract was drafted.

• Contracts with a rate escalation clause - where the client agrees to absorb award rate increases are protected. Review the clause to confirm it covers the 1 July increase and the C13 structural adjustment specifically.
• Contracts without a rate escalation clause — where a fixed rate was agreed for the contract term — leave the labour hire business absorbing any increase that has occurred since signing.
• Contracts coming up for renewal in July, August or September 2026 should be repriced on the new post-1 July rates before the renewal is executed.

The tender window risk

Tenders submitted before 2 June 2026 before the FWC decision was handed down were built on pre-increase rates. If those tenders are awarded and work commences after 1 July, the business is delivering under a price built on rates that are already out of date.

For any tender currently in evaluation that may be awarded post-1 July, it is worth confirming whether there is a mechanism to reprice based on the confirmed rate increase — before the contract is executed.

Wage theft is now a federal criminal offence.



Section 327A of the Fair Work Act 2009 makes intentional underpayment of employee wages and entitlements a criminal offence. The penalties are substantial:

Several important clarifications on scope:

• Honest mistakes remain civil matters, not criminal ones — but the distinction between honest mistake and culpable negligence narrows as tools become more accessible
• Ongoing underpayments that began before 1 January 2025 are captured by the criminal provisions if they continued after that date
• The legislation covers wages, penalty rates, overtime, allowances, superannuation and leave entitlements not just base rates
• Fair Work Inspectors have increased audit activity following the legislation's introduction

The combination of a 4.75% general increase, a 6% increase for C13 and C14 workers, and criminal liability for intentional underpayment fundamentally changes the risk calculus of getting this wrong. 'We used the wrong spreadsheet' is not a defence.

What employers need to do before and after 1 July

Immediate actions — before your first post-1 July pay run



1.   Identify every employee covered by a modern award and confirm their classification level. Pay particular attention to any workers at C13 or C14 level — or the equivalent in their relevant award.

2.   Apply the correct percentage increase. 4.75% for most award-covered workers. 6% for workers on C13 or C14 rates. Do not apply a flat 4.75% across the board if any of your workforce is on C13 or C14.

3.   Check C14 worker tenure. Any C14-classified worker who has been employed for 6 months or more must be reclassified to at least C13 immediately. Create a forward schedule for workers approaching the 6-month mark.

4.   Update all rate schedules, quote templates and payroll system configurations before the first full pay period on or after 1 July.

5.   Review above-award arrangements. Confirm that your current payments still exceed the new award minimums — particularly for C13-classified workers where the minimum has increased by 6%.

6.   Review client contracts for rate escalation provisions. For contracts without them, assess the margin impact of the increase and prioritise those for renegotiation or renewal.

7.   Document everything. Record the new rates applied, by classification, the effective date, the source (FWC Annual Wage Review 2026, [2026] FWCFB 3500), and the name of the person who made the update.

Forward planning — for the 2027 and 2028 Annual Wage Reviews

1.   Build the C13 phase-out into your commercial planning. Any contract signed post-1 July 2026 that covers C13-classified workers and extends into 2027 should account for Stage 2 of the phase-out — another above-general increase — at the 2027 Annual Wage Review.

2.   Mark the 2027 Annual Wage Review in your compliance calendar. The FWC hands down its decision in early June each year, with a 1 July effective date. The timeline is the same every year.

3.   Review any contracts that will still be active at the 2028 Annual Wage Review, when C13 is abolished and C12 becomes the new minimum floor. Any pricing that assumed C13 as the base rate will need to be reassessed.

The rate is only as good as the system behind it.



RatesCalc is Australia's only purpose-built wage compliance and quoting platform for recruitment and labour hire. Award rates update automatically after every Fair Work Commission decision. Compliant client quotes in under two minutes. Full audit trail included.

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