From minimum wage increases and Payday Super to Paid Parental Leave and Fair Work threshold changes, here’s what employers need to know from 1 July 2026.

The start of a new financial year always brings important changes for employers, and 1 July 2026 is no exception. This year sees a number of significant workplace changes, including increases to minimum wages, the expansion of Paid Parental Leave, new Fair Work thresholds, the ongoing rollout of Payday Super and developments in workplace health, safety and discrimination law.

Whether you’re a small business owner or managing a large workforce, now is the perfect time to review your payroll, employment contracts and HR practices to ensure your business remains compliant. Here’s a practical overview of what has changed, what requires immediate attention, and what employers should keep on their radar.

Payday Super – Time to review your payroll processes

One of the most significant workplace reforms currently underway is the move towards Payday Super. The long-term objective is for employers to pay superannuation at the same time employees are paid, rather than making quarterly superannuation contributions. While implementation continues to be phased in, businesses should already be preparing by reviewing

  • Payroll software and system capability
  • Payroll processes and workflows
  • Cash flow forecasting
  • Internal payroll procedures
  • Employee communication

Businesses that have traditionally relied on quarterly superannuation payments may need to make significant operational changes over the coming months. Preparing early will make the transition much smoother.

Out-of-cycle payroll payments

Many businesses make payments outside their normal payroll cycle, including

  • Bonuses
  • Commissions
  • Back payments
  • Payroll corrections
  • Termination payments

These payments can create uncertainty around when superannuation must also be paid. As payroll compliance requirements continue to evolve, employers should ensure all out-of-cycle payments are reviewed for superannuation obligations and processed correctly. Strong payroll governance has never been more important.

Paid Parental Leave expands to 26 weeks

Eligible families can now access 26 weeks of Government Paid Parental Leave, continuing the Government’s staged expansion of the scheme. While Paid Parental Leave is government-funded, employers still play an important role in administering leave and supporting employees before, during and after parental leave. Now is a good opportunity to review

  • Parental leave policies
  • Return-to-work procedures
  • Payroll processes
  • Manager training
  • Flexible work arrangements

Supporting employees through parental leave isn’t just about compliance—it also improves retention and employee engagement.

Minimum wages, high-income threshold and compensation caps increase

Several important Fair Work thresholds have increased from 1 July 2026, making it essential for employers to review payroll systems, salary arrangements and employment contracts.

Minimum wages and Award rates

The Fair Work Commission has increased the National Minimum Wage and minimum rates of pay under Modern Awards. Employers should ensure

  • Payroll systems have been updated with the new rates.
  • Award allowances have increased where applicable.
  • Apprentices and trainees are being paid correctly.
  • Employees paid above Award continue to receive at least their minimum legal entitlement.
  • Annualised salary arrangements continue to satisfy the Better Off Overall Test (BOOT), where applicable.

Even businesses paying above Award rates should review salaries, as Award increases can reduce the buffer between an employee’s salary and their minimum legal entitlement, increasing the risk of underpayments.

High-income threshold increases to $190,100

The High-Income Threshold (HIT) has increased from $183,100 to $190,100. This threshold is important because it impacts

  • Unfair dismissal eligibility for employees who are not covered by a Modern Award or Enterprise Agreement.
  • Guarantee of Annual Earnings arrangements used to remove Award coverage.
  • Certain fixed-term employment provisions.
  • Businesses should review senior employee contracts and salary arrangements to ensure they continue to operate as intended under the new threshold.

Maximum unfair dismissal compensation increases

The maximum compensation available in an unfair dismissal application has increased from $91,550 to $95,050. The Fair Work Commission may award the lesser of

  • 26 weeks’ remuneration; or
  • $95,050.

Although few claims result in the maximum compensation, the increase reinforces the financial risks associated with procedurally unfair dismissals, inadequate investigations and poor performance management practices. Now is an excellent time to review your disciplinary procedures and ensure managers understand the importance of following fair and compliant processes.

NSW psychological injury compensation changes

For employers operating in New South Wales, reforms to psychological injury compensation have commenced. The changes are designed to improve the sustainability of the workers’ compensation scheme while refining how psychological injury claims are assessed. Regardless of where your business operates, employers should continue focusing on psychosocial hazards such as

  • Bullying and harassment
  • Workplace conflict
  • Excessive workloads
  • Poor leadership
  • Occupational violence
  • Inadequate support
  • Lack of role clarity

Psychological safety remains one of Australia’s fastest-growing workplace compliance obligations, making proactive risk management more important than ever.

Other workplace reforms to watch

Employment law continues to evolve rapidly. Businesses should also keep an eye on developments relating to

  • Artificial Intelligence in recruitment
  • Workplace surveillance
  • Casual employment reforms
  • Wage theft enforcement
  • Psychosocial safety obligations
  • Right to Disconnect obligations
  • Closing Loopholes reforms
  • Future industrial relations amendments

Remaining proactive helps businesses avoid costly compliance issues before they become legal problems.

Your mid-year HR compliance checklist

The start of the financial year is an ideal time to conduct a quick HR health check. Consider reviewing

  • Payroll systems and Award rates
  • Superannuation processes
  • Employment contracts
  • Salary arrangements
  • Payroll software
  • Leave policies
  • Performance management procedures
  • Workplace behaviour policies
  • Psychosocial risk controls
  • Manager capability and training
  • HR documentation

Identifying and addressing small issues now is significantly easier and far less costly than responding to a Fair Work investigation, underpayment claim or unfair dismissal application later.

Need help navigating the changes?

Keeping up with employment law while running a business can be challenging. If you’re unsure whether your payroll, employment contracts, workplace policies or HR practices remain compliant following the 1 July changes, now is an ideal time to undertake a compliance review.

At HR Cornerstone, we partner with businesses across Australia to deliver practical, commercially focused HR advice. From payroll compliance and Award interpretation through to workplace investigations, performance management and strategic HR support, we help employers reduce risk and build confident, compliant workplaces.

Need assistance? We’d be happy to help you navigate the latest workplace changes and ensure your business is ready for the year ahead.