A number of updates to employment rates, thresholds and limits in Australia come into effect on 1 July 2025. Explore the summary below to understand how these changes will affect conditions of employment, superannuation and impact your workplace.
Increase to minimum wage
The Fair Work Commission's Annual Wage Review 2024-25 decision increased both modern award rates and the national minimum wage by 3.5%. This increase will apply from the first full pay period starting on or after 1 July 2025.
- The national minimum wage, which applies to employees who are not covered by an award or enterprise agreement, has now increased to $24.95 per hour (up from $24.10), or $948.00 based on a 38-hour week (up from $915.90). For casual employees, the new national minimum wage is $31.19 per hour (up from $30.13). The casual rate includes a 25% casual loading.
- The wages provided within modern awards are also to be amended to reflect the 3.5% increase.
Employers are urged to review their employees' pay rates and the terms of any applicable modern awards, to ensure that they are at or above the new minimum rates.
Unfair dismissal high income threshold
New threshold: $183,100 (previously $175,000)
This threshold applies to all employee dismissals which are effected on or after 1 July 2025.
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
Unfair dismissal compensation cap
New cap: $91,550 (previously $87,500)
This new limit applies to all unfair dismissal claims which are lodged on or after 1 July 2025.
The unfair dismissal compensation cap specifies the maximum compensation which 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
Contractor high income threshold
New threshold: $183,100 (previously $175,000)
This threshold has two key implications for the new protections for "employee-like workers" which were introduced last year as part of Closing Loopholes No. 2.
- Regulated workers (i.e. an employee-like worker on a digital labour platform or a regulated road transport contractor) who earn above this threshold are not eligible to make a claim for unfair deactivation or unfair termination; and
- Parties to a services contract with annual earnings higher than this threshold, are not able to make an unfair contract term claim.
For more information regarding the unfair deactivation, unfair termination and unfair contract terms frameworks, please see our previous article.
Limit for tax-free component of genuine redundancy payments
New limit: $13,100 + ($6,552 x complete years of service)
This limit was previously $12,524 + ($6,264 x complete years of service) between 1 July 2024 to 30 June 2025.
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 limit for a genuine redundancy payment is calculated using a base limit and a service-related component. Any amount over the tax-free limit is called an "employment termination payment" (i.e. ETP) and may be subject to different tax rules. Learn more
Superannuation guarantee rate
New rate: 12.0% per annum (up from 11.5%)
This increase marks the final adjustment to the superannuation guarantee (SG) rate under existing legislation, following annual 0.5% increments since July 2021.
The SG rate specifies the minimum superannuation contributions Australian employers must make on behalf of eligible employees (up to the maximum superannuation contribution base which we discuss below).
We recommend that employees review and update their payroll systems to ensure that they are making at least the minimum required superannuation contributions in light of the SG rate increase effective from 1 July 2025. Learn more
Maximum superannuation contribution base
New limit: $62,500 per quarter (down from $65,070)
The maximum superannuation contribution base is a limit on the contribution an employer is required to make on behalf of an employee under the SG scheme in Australia.
Where an employee earns more than the maximum superannuation contribution base in a quarter, the employer is not obliged to make superannuation contributions on the excess. In practice, this new limit means that the maximum SG amount an employer is required to make on behalf of an employee each quarter in the 2025-26 financial year is $7,500 which equates to $30,000 per annum. 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
This means that for FY26, the maximum superannuation contribution base will align with the concessional superannuation cap.
Concessional superannuation cap
The concessional superannuation cap remains at $30,000 for the 2025-26 financial year (the same as for the 2024-25 financial year), despite changes to the superannuation guarantee rate and the maximum superannuation contribution base.
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 2025, the amount of paid parental leave offered by the Federal Government for eligible workers increases from 22 to 24 weeks.
The amount of paid parental leave will increase to 26 weeks on 1 July 2026. Learn more
Superannuation on paid parental leave
From 1 July 2025, the ATO will now make superannuation contributions of 12% on Federal Government funded parental leave pay. This contribution will be paid as a lump sum at the end of each financial year and will include interest.
The first superannuation contribution for Federal Government funded parental leave will be made by the ATO in the 2026-2027 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.
All information on this site is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted.
