Blog Post: What the Super and Minimum Wage Increases Mean for Australian Workers and Businesses

From 1 July 2025, two significant changes will come into effect for Australian businesses and workers:

• The Superannuation Guarantee will increase from 11.5% to 12%

• The National Minimum Wage will rise by 3.5%

These changes are part of broader efforts to improve financial security for employees, especially in light of rising living costs. While these updates offer long-term advantages to the workforce, they also present real and immediate cost implications for businesses, particularly small and medium-sized enterprises (SMEs) operating in highly competitive markets.

Superannuation to Increase to 12%

The final planned rise in the Superannuation Guarantee will see employer contributions reach 12% of ordinary time earnings. For employees, this is a positive step toward more secure retirement savings. For employers, however, it represents an additional cost that must be factored into payroll budgets.

In sectors with large casual or award-reliant workforces, such as hospitality, retail, and manufacturing, this increase can place pressure on margins. While larger businesses may be better equipped to absorb or manage the costs, many SMEs may face tough decisions about pricing, staffing, or operational changes.

Minimum Wage Increase: 3.5%

The Fair Work Commission has also announced a 3.5% increase to the minimum wage, lifting the full-time hourly rate to $24.95. This aims to help low-income workers keep up with inflation and cost-of-living pressures.

For employees, it means a higher base income. For employers, particularly those who already operate on slim margins, it may require price adjustments to sustain profitability. In the current climate, where consumers are increasingly cost-conscious, raising prices is not always feasible. This creates a delicate balancing act between remaining competitive and ensuring fair pay for staff.

Award vs. Above-Award Wages in Australia

According to Fair Work and ABS data:

• Around 20–25% of Australian employees are paid exactly to the award

• About 60% are covered by enterprise agreements or paid above-award rates

• The remainder includes salaried professionals and senior staff well above minimum thresholds

Benefits of Paying Above Award

Employers who offer above-award wages often benefit from:

• Attracting more qualified candidates

• Improving staff retention

• Building a stronger employer brand

• Boosting productivity and morale

However, in industries with low margins, offering significantly above-award pay may not be viable. Employers must weigh these benefits against financial sustainability and find a balance that suits their business model.

Weighing the Pros and Cons

Positive Outcomes:

• Improved financial stability and retirement savings for employees

• Increased consumer spending as wages rise

• Potential for stronger employee engagement and retention

Business Challenges:

• Higher payroll costs across wages, superannuation, payroll tax, and Workers’ Compensation

• Possible need to increase pricing to maintain profitability

• Difficulty in raising prices without losing customers in price-sensitive markets

A Time for Strategic Planning

For many businesses, these changes will require more than a payroll update—they’ll need a thoughtful review of workforce structures, pricing strategies, and cost-efficiency measures. Open communication with employees, proactive budgeting, and seeking external payroll or HR support can make a meaningful difference during the transition.

Employers may also want to assess options like streamlining operations, reviewing supplier contracts, or adjusting staffing models to help absorb some of the additional costs without compromising service quality.

If you'd like help with payroll processing, Complete Recruitment Solutions is here to assist.