The 1 July Wage Rise Will Hit Harder Than You Think: 3 Traps SMEs Can’t Afford to Miss

From 1 July 2025, the Fair Work Commission is raising the National Minimum Wage to $24.94 per hour (or $948 per week). Modern Award wages will also increase by 3.5 percent across the board
(Fair Work Commission – Annual Wage Review 2024–25).

For small to medium businesses, this is not just an admin update. It is a compliance and cost challenge that could hit your cash flow or lead to legal trouble if ignored.

Here are the three biggest traps most businesses are missing that are worth acting on today.

1. The Wage Shock Calculator That Tells You the Real Cost

Most SMEs have not run the numbers. Here is your Wage Shock Formula:

(Number of award covered employees) × (Average weekly wage) × 0.035 × 52 = Annual impact

Example:
5 full time staff × $915.90 × 0.035 × 52 = $8,334 in extra wages per year

And that does not include superannuation, penalties, or allowances. If you do not plan for it now, you will feel it later in your cash flow and pricing.

2. Award Hotspots You Might Be Missing

Think you are award free? Think again. These are some of the awards that commonly catch SMEs off guard:

• Clerks Award – applies to admin staff in finance, trades, broking, construction and more
• Miscellaneous Award – covers roles that do not clearly fall into another award
• Fast Food Award – even small cafes with takeaway services might fall under this
• Road Transport Award – got someone doing deliveries? You might be covered

Get it wrong and you could be underpaying thousands of dollars per employee each year. The Fair Work Ombudsman does not accept “we did not realise” as an excuse.

Not sure what applies? Use the Fair Work Award Finder Tool to confirm.

3. The Payroll Trap Most Businesses Walk Into

(Using Xero, MYOB or QuickBooks? Do not assume your system will apply new rates automatically. Unless you have the right settings or add ons, the increase will not flow through)

That means you could be underpaying your staff from 1 July and not even realise it. With new changes to the Fair Work Act 2009, intentional wage underpayment is now a criminal offence
(Fair Work – Wage Theft to Become a Crime).

If you rely on automation without checking the details, you are risking fines, back pay and reputational damage.

SME Action Plan Before 1 July

• Run the Wage Shock Calculator
• Check every employee’s award classification
• Manually update your payroll system
• Communicate the change with your staff
• Adjust budgets, rosters or pricing if needed
• Do not assume. Check. Confirm. Comply.

Final Word