1 July 2025 marked the start of the new financial year in Australia, which means that new employment thresholds and limits are now in effect. We summarise the key changes that employers need to be aware of below.
Pay and benefits
National minimum wage: AUD 948 per (38 hour) week or AUD 24.95 per hour (an increase of 3.5%)
Modern Award minimum wage rise: Increased by 3.5%
Modern Awards are enforceable documents that outline minimum pay rates and terms and conditions of employment and relate to particular industries or occupations. From the first full pay period starting on or after 1 July 2025, the minimum award wages have increased by 3.5%.
High-income threshold / Contractor high-income threshold: AUD 183,100
The high-income threshold operates as a limit to an employee or contractor's eligibility to pursue claims under the Fair Work Act 2009 (Cth) in respect of unfair dismissal or unfair contract terms, subject to the application of particular industrial instruments or other protections.
Superannuation guarantee: 12%
Under the superannuation guarantee, employers must pay super contributions of 12% of an employee's ordinary earnings where certain conditions are met.
Maximum superannuation contribution base: AUD 62,500 per quarter
Earnings that exceed this amount are not included for the purposes of calculating the superannuation guarantee payment.
Termination of employment
Unfair dismissal compensation limit: AUD 91,550
Tax-free limit for genuine redundancy payments: AUD 13,100 (base limit) and AUD 6,552 for each completed year of service.
Takeaway for employers
Employers should review and ensure that their payroll processes meet the new wage rates and superannuation contributions effective from 1 July 2025. Employment contracts may give an employer the ability to absorb the new wage rates and superannuation increases so regard should also be had to employment contract terms.
For those preparing for workforce redundancy or restructuring exercises, it is also important to factor in the tax-free limit as part of any planning process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
