Three Things Changing on 1 July 2026 - and What Every Australian Employer Must Do Now

Every year, 1 July triggers a stack of employment law changes that employers are supposed to have already dealt with. Most haven't. Some don't know they exist.

This year the stack is bigger than usual.

Three distinct changes land on or around 1 July 2026: the Annual Wage Review (modern award minimum wages up 4.75%, with a $25.74/hour entry-level award floor), Payday Superannuation (super paid every payday, not quarterly), and SCHADS Award sleepover changes (already in effect since 1 June for disability and community services employers). Each one has a different risk profile. Combined, they represent the most significant cluster of compliance obligations in a single financial year transition since the introduction of Single Touch Payroll.

This article explains what changed, why it matters more than the usual July adjustments, and what you need to do before you run your first July payroll.

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1. Annual Wage Review 2026: 4.75% increase to award minimum wages

The Fair Work Commission handed down the 2026 Annual Wage Review decision on 2 June 2026. Modern award minimum wages will increase by 4.75% from the first full pay period on or after 1 July 2026.

The National Minimum Wage rises to $26.44 per hour - $1,004.90 per week. The entry-level award floor is now $25.74 per hour - $978.10 per week. This is the first time the National Minimum Wage has exceeded $1,000 per week.

The increase affects approximately 2.7 million workers - around 21% of the Australian workforce. It is larger than last year's 3.5% increase and reflects the FWC's assessment that, despite progress, real wages for award-dependent workers have not fully recovered.

What this means in practice

If you employ anyone covered by a modern award, you need to:

• Verify that your payroll software has loaded the new rates before running your first July pay cycle. Most providers update automatically, but do not assume.
• Audit employees paid at or near the current award minimum. A 4.75% increase may lift the award floor above some above-award pay points - particularly for employees who received smaller ad hoc increases over the past year.
• Check EBA rates. Enterprise agreements cannot fall below the applicable modern award rate. If your EBA has not kept pace, you may be required to top up.
• Review allowances calculated as a percentage of the base rate. A higher base flows through to those allowances automatically - confirm your payroll is handling this correctly.

One area that catches employers out: lower award classifications and entry-level rates do not always move in the same way as higher classifications. If you employ workers in entry-level or transitional classifications, check the revised rate for your specific award rather than applying a flat percentage assumption.

The liability if you get it wrong

Underpayment of award wages is a civil penalty matter under the Fair Work Act. The Fair Work Ombudsman has been increasingly active in enforcement, including against small businesses. Each underpayment can constitute a separate contravention. The FWO's Small Business Fair Dismissal Code does not create a shield here - award compliance is not discretionary.

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2. Payday Super: The biggest change to super administration since STP

If the Annual Wage Review is the routine July adjustment, Payday Superannuation is the structural reform.

From 1 July 2026, employers must pay superannuation guarantee contributions on every payday - not quarterly. Contributions must be received by the employee's nominated super fund within 7 business days of the pay date.

The Treasury Laws Amendment (Payday Superannuation) Act 2025 has passed. This is not a proposal or a pilot. It is law, effective 1 July 2026.

What is actually changing

Under the current system, employers can accumulate SG contributions and pay them up to 28 days after the end of each quarter - a practice that creates a payment lag of up to four months between when wages are earned and when super is credited to an employee's account.

From 1 July, that lag is gone. Super becomes a real-time payroll obligation. The day you pay your employees is the day you are required to initiate the super contribution.

Three related changes come with this:

Qualifying Earnings replaces Ordinary Time Earnings. QE is a new concept that brings together ordinary time earnings and certain other payments into a single base for calculating SG. Your STP-enabled payroll software needs to correctly classify each pay code to QE categories from 1 July. This mapping needs to happen before go-live - not on the day.

The ATO Small Business Clearing House closes. The SBSCH - the free clearing house used by approximately 200,000 small business employers - is closing on 1 July 2026 because it cannot operate in a payday super environment. If you use it, you need an alternative in place before 1 July. Options include your payroll software's built-in clearing house, a commercial clearing house provider, or direct fund payment if you have a small number of employees with the same fund.

The Super Guarantee Charge applies per payday, not per quarter. Under the current system, the SGC triggers if you miss a quarterly payment date. From 1 July, it can trigger on any payday where contributions are not received by the fund within 7 business days. The charge calculation method is also changing. The ATO will monitor compliance using STP and fund receipt data.

The transitional period

July 2026 will have obligations under both the old system and the new. Your final quarterly payment - covering the period ending 30 June 2026 - is due in employees' accounts by 28 July 2026. There is no late payment offset for this quarter. Missing the 28 July date triggers the SGC.

At the same time, from 1 July, your new payday obligations begin for wages paid from that date.

Practically, this means you may have multiple super payment obligations landing in the same month. Review your expected pay cycles for July and confirm you have funds allocated for both the June quarter finalisation and the new payday cadence.

The cash flow question

This change has a material cash flow implication for businesses that relied on the quarterly super float to manage working capital. Super is now effectively part of the cost of every pay run - not a deferred expense. If your cash flow planning has not been adjusted for this, address it before July.

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3. SCHADS Award sleepover changes: Already in effect

The third change is already law - and if you employ workers in disability services, community services, home care, or youth residential care under the SCHADS Award, your compliance gap may already have started.

The Fair Work Commission's April 2026 decision varied the Social, Community, Home Care and Disability Services Industry Award 2010 to clarify how sleepover shifts must be rostered and paid. The changes took effect from the first full pay period on or after 1 June 2026.

What changed

The core issue the FWC resolved was whether a sleepover period - typically 8 hours overnight - constitutes a break between shifts. The answer is now unambiguous: it does not.

Work performed immediately before a sleepover and work performed immediately after it must be treated as a single continuous shift for the purposes of the Award. You cannot split a sleepover span into two separate shifts, pay them at ordinary rates, and treat the sleepover as the break in between.

This matters for overtime. Overtime under SCHADS applies when the total active working time in a shift exceeds 8 hours (for most categories). Under the old interpretation, each side of a sleepover could be treated as a separate shift, both potentially under the 8-hour overtime threshold. Under the new rules, those hours are added together.

The 12-hour extended shift option

The FWC also introduced a new option: by written agreement between employer and employee, a shift including a sleepover can extend to up to 12 hours of active work - with a maximum of 8 ordinary hours on either side of the sleepover. Overtime applies for any active work beyond 12 hours.

This is optional, not automatic, and requires a written agreement with each employee. It provides flexibility for services (particularly youth residential care) that rely on continuity of presence across an evening and morning handover. It does not permit open-ended rostering - the 8-hour cap on each side is a hard limit.

Shift loadings

Afternoon and night shift loadings are assessed independently for each period of work - the hours before the sleepover and the hours after. The applicable loading depends on when each work period starts and finishes, assessed separately. The SCHADS Award's shift definitions apply to each segment.

Backpay

The FWC confirmed the changes apply prospectively from 1 June 2026 only. There is no obligation to recalculate pay for sleepover arrangements before that date.

What employers need to do now

If you haven't already:

• Reconfigure your payroll system and rostering tool to treat sleepover spans as a single shift.
• Audit current rosters for any configurations that now trigger overtime under the new rules that did not previously.
• Prepare written agreements before rostering the extended 12-hour option.
• Confirm your payroll is applying shift loadings to each work period independently.

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The July 1 action list

Three changes, three action lists, one deadline. The July 1 Compliance Checklist consolidates every item from this article into a single printable document you can work through with your payroll team or manager.

The highest-urgency items:

1. Replace the SBSCH before 1 July if you currently use it for super payments.
2. Confirm payroll software is updated with new award rates and Payday Super STP reporting before your first July pay run.
3. Review SCHADS rosters now if you haven't already - the sleepover changes are already in effect.

If you need help applying any of this to your specific workforce, Flex HR provides fractional HR and employment relations support for businesses that need senior-level input without the overhead of a full-time hire.

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Sources: Fair Work Commission Annual Wage Review 2026 Decision, announced 2 June 2026; Treasury Laws Amendment (Payday Superannuation) Act 2025; ATO Payday Super guidance (ato.gov.au/paydaysuper); Fair Work Ombudsman, 'Changes to sleepovers in the SCHADS Award', updated May 2026.

This article is general information only and does not constitute legal advice. Seek independent advice tailored to your circumstances.