ACTU Wants 5% Pay Rise in 2026 — What It Means for Your Pay

The ACTU filed its submission to the Fair Work Commission's Annual Wage Review 2025-26 last week. The headline ask: a 5% increase to the National Minimum Wage and all modern award minimum rates from 1 July 2026.

In dollar terms that's an extra $1.30 per hour on the current NMW of $24.95/hr, taking it to $26.19/hr. For a full-time worker on 38 hours, that's $49.40 extra per week, or roughly $2,568 a year before tax.

The ACTU's case rests on three numbers. Headline inflation sitting at 3.8%. Nominal wage growth (the Wage Price Index) at 3.4%. And living costs for low-income households running ahead of both. ACTU secretary Sally McManus framed it bluntly: "Low-paid workers are going backwards. A 5% increase isn't a pay rise, it's catch-up."

For context, last year's decision was a 3.75% increase. The year before that, 5.75%. The 5% claim sits in the middle of the recent historical range, and it's actually below what the ACTU asked for in 2023. So this isn't a wild outlier. It's a measured response to an inflation environment that hasn't cooled as fast as the RBA hoped.

The Fair Work Commission's decision, whatever it lands at, will flow through automatically to around 2.7 million award-reliant workers and around 184,000 workers on the NMW itself. That's roughly one in four Australian employees.

The pay-catch-up argument isn't rhetorical. It's in the ABS data. Here's the picture the Commission will be looking at.

• Wage Price Index (Dec 2025 quarter): +3.4% annual
• CPI headline inflation (Dec 2025 quarter): +3.8% annual
• CPI selected living cost index (employee households): +4.2% annual
• Real wages: down 0.4% year-on-year

Translated: the average Australian worker's pay went up 3.4% but the stuff they actually buy went up 3.8%. That's a real-terms pay cut. And for workers on employee household living cost measures (which include mortgage interest), the gap is wider still.

For an award worker on $60,000, a 0.4% real pay cut is about $240 out of pocket per year. Sounds small until you layer it across the three preceding years where real wages were also flat or negative. The cumulative real wages gap for minimum-wage workers since 2021 sits around 3.5-4% according to Treasury's own modelling.

The ACTU's argument is that the 2026 wage review is the Commission's one lever to reverse that. A nominal 5% increase would push real wages up by roughly 1.2% after inflation — a modest but meaningful restoration of purchasing power.

Employers dispute the framing. We'll get to their side in a minute. But the numbers themselves aren't in dispute. The ABS data is what it is.

This decision isn't abstract. If the FWC hands down 5%, or anything close, the money lands in specific people's accounts. Here's who.

National Minimum Wage workers (~184,000): These are workers whose employment isn't covered by any award or enterprise agreement. Think some gig-adjacent roles, one-off contractors reclassified as employees, and pockets of the non-unionised small-business workforce.

Award-reliant workers (~2.7 million): These are the big numbers. Workers whose pay is set directly by a modern award rate because they're not on an enterprise agreement or a significantly above-award individual contract. The biggest award-reliant industries:

• Aged care: around 350,000 workers covered by the Aged Care Award and the Nurses Award — some of the biggest beneficiaries of recent rises
• Retail: around 480,000 workers under the General Retail Industry Award 2020
• Hospitality: around 420,000 workers under the Hospitality Industry (General) Award and Restaurant Industry Award
• Nursing (private sector): around 150,000 RNs, ENs and AINs under the Nurses Award 2020
• Cleaning services: around 140,000 workers under the Cleaning Services Award
• Early childhood education: around 130,000 workers under the Children's Services Award and ECE Award
• Fast food: around 200,000 workers under the Fast Food Industry Award

Indirectly, a lot more workers benefit too. Many enterprise agreements use the award rate as a baseline and specify "award rate + X%" — so when the award moves, the EBA rate moves with it. Unions estimate the flow-on effect pushes the real beneficiary count closer to 5 million workers when EBA flow-ons are included.

Not sure which award you're on? Use our award finder to check.

The Annual Wage Review isn't a free-for-all. It's governed by specific provisions in the Fair Work Act 2009, and the Commission is required to weigh a defined list of considerations. Knowing the framework helps you predict where this is headed.

Section 285 of the Fair Work Act requires the Fair Work Commission to conduct an annual wage review each financial year. The Expert Panel (currently a five-member panel chaired by the Commission's President, Justice Hatcher) must review the National Minimum Wage order and all modern award minimum wages.

Section 284 sets the "minimum wages objective" — the criteria the Commission must consider. They include:

• The performance and competitiveness of the national economy
• Promoting social inclusion through increased workforce participation
• Relative living standards and the needs of the low paid
• Principles of equal remuneration for work of equal value
• Providing a comprehensive range of fair minimum wages to junior employees, employees with disabilities, and apprentices

The "needs of the low paid" and "relative living standards" criteria are where ACTU's real-wages argument lands hardest. If the Commission finds that low-paid workers are going backwards, that's a direct s.284 trigger for a larger increase.

On the other side, the "performance and competitiveness of the national economy" criterion is where employer groups focus. They'll argue a 5% increase would add inflationary pressure, hurt small-business viability, and potentially cost jobs.

The Commission then has to balance these. In recent years it has generally leaned toward supporting low-paid workers when inflation was above target, and moderating increases when inflation was lower. With headline CPI at 3.8%, the 2026 decision is likely to land somewhere between 3.5% and 4.5% — below the ACTU's 5% ask but above the employer submissions.

The annual wage review runs to a fixed calendar and the timeline matters because it tells you exactly when money hits your pay slip. Here's the 2026 schedule as published by the Commission.

• 27 March 2026: Submissions closed (ACTU, employer groups, state governments, individual unions all lodged)
• 17 April 2026: Reply submissions due
• 12-14 May 2026: Public consultations and hearings at the Fair Work Commission in Melbourne and Sydney (live-streamed)
• Early June 2026: Expert Panel deliberations
• Mid-late June 2026: Decision handed down and reasons published (historically around 2-4 June, but the 2025 decision landed on 3 June and the 2024 decision on 3 June — so expect early June 2026)
• 1 July 2026: National Minimum Wage Order and modern award minimum rate variations take effect for all pay periods starting on or after this date

Critical point about that last one. The increase applies to the first full pay period commencing on or after 1 July 2026. If you're paid weekly and your pay week runs Monday to Sunday, and 1 July 2026 is a Wednesday, your new rate kicks in from Monday 6 July 2026. If you're paid fortnightly with a period starting 29 June, your new rate doesn't start until the next fortnight on 13 July.

So don't expect your pay slip to magically jump on 1 July. Check your pay cycle dates carefully and use our pay calculator to verify the new rate is being applied correctly once the decision is published.

The other side has filed too, and the numbers are predictably different. Here's where the major employer groups have landed in their 2026 submissions.

Australian Industry Group (AiGroup): submission recommends 2.5%. AiGroup argues that a larger increase would be "inflationary and damaging to employment, particularly in manufacturing and small business." They point to the Reserve Bank's concerns about sticky services inflation and argue wage restraint is critical to getting CPI back to the 2-3% target band.

Australian Chamber of Commerce and Industry (ACCI): submission recommends 2.25-2.75%. ACCI's submission leans heavily on small business insolvency data (ASIC reports Q4 2025 small-business insolvencies up 34% year-on-year) and argues many small employers simply cannot absorb another above-3% increase.

Council of Small Business Organisations Australia (COSBOA): submission recommends 2%. The lowest of the major employer submissions. COSBOA emphasises the compounding effect of recent increases, noting that since 2022 minimum rates have risen approximately 18% cumulatively, while many small-business revenues have grown well below that.

Restaurant and Catering Australia: recommends a freeze or below-CPI increase, citing the well-documented pressure on hospitality margins and the recent closure rates in city-centre venues.

The federal government's submission sits in the middle. The Commonwealth submission doesn't recommend a specific number but supports "an increase that maintains the real value of minimum wages while being consistent with inflation returning to the RBA target band." Translation: probably 3.5-4%, in that ballpark.

State governments have mostly submitted in support of meaningful real-wage increases. Victoria and Queensland recommended 4.5-5%. NSW recommended 4%. WA recommended a real-wage-preserving increase without specifying a number.

So the range the Expert Panel is working with: from COSBOA's 2% up to ACTU's 5%, with the mid-point around 3.5%. Recent decisions suggest the Commission lands roughly 60-70% of the way between employer and union submissions, which would put the 2026 outcome somewhere around 3.75-4.25%.

The decision isn't until June, but there are three practical moves you can make this week.

1. Confirm what you should be on right now. A lot of award workers don't realise they're being paid at an old rate. The current NMW is $24.95/hr (from 1 July 2025), and every modern award classification has its own minimum rate above that. Use our pay rates lookup to check your classification is correct, then verify your hourly rate on your most recent payslip.

2. Make a submission (yes, you can). The Fair Work Commission accepts submissions from individuals, not just organisations. If you're an award-reliant worker and you've experienced the real-wage squeeze, a short email to awr@fwc.gov.au citing your circumstances can genuinely influence the decision. Reply submissions are open until 17 April 2026.

3. Budget for the 1 July change (or the absence of it). If you're on an award, assume a 3.5-4% increase from 1 July 2026 and plan around that range. Don't bank on 5%. But don't assume zero either. For a worker on $55,000, a 4% increase is $2,200 before tax — enough to cover one or two meaningful bill increases.

One more: if your employer is currently paying below the minimum award rate, you're entitled to back-pay going back up to 6 years under s.544 of the Fair Work Act. Use our back-pay calculator to work out what you might be owed, and our underpaid check to verify.

When exactly will the 2026 wage increase take effect?
The Fair Work Commission will hand down its decision in early-to-mid June 2026. Whatever the increase is, it takes effect from the first full pay period commencing on or after 1 July 2026. If your pay period starts mid-week, your increase won't show up until your next full pay cycle.

Does the wage review affect enterprise agreement (EBA) workers?
Only indirectly. EBA rates are set by the agreement, not the award. But many EBAs include clauses tying pay to "the modern award rate plus X%" or "the NMW plus X%," so when the award moves, those EBA rates automatically move too. Check your EBA's wages clause to see if yours does this.

What if my employer doesn't apply the increase?
That's a straightforward underpayment. Once the Commission's decision is published, applying it from 1 July is mandatory, not optional. You can recover the underpayment through the Fair Work Ombudsman or the Federal Circuit Court, and you can claim up to 6 years of back-pay under s.544 of the Fair Work Act.

Will the 5% ACTU claim actually get up?
Unlikely in full. The Expert Panel has only awarded 5% or above twice in the past decade (2022-23 and 2023-24, both during peak inflation). With CPI at 3.8% and moderating, the 2026 decision is more likely to land around 3.5-4.25%. But ACTU's ask genuinely shifts the centre of gravity — it's why the employer submissions are now arguing 2-2.5% rather than a freeze.

Does this apply to casual workers?
Yes. The award minimum rate is the base rate, and the 25% casual loading is calculated on top. So if your base rate goes up, your loaded casual rate goes up by 25% more. A 4% increase on a $25/hr base lifts the casual rate from $31.25 to $32.50.