If your labour rates didn’t change on 1 July, your margins did. Australia’s annual wage review increased modern award minimums by 3.5% from the first full pay period on or after 1 July 2025, which flows straight into job costs for crews on awards. That’s before you factor in the super guarantee now at 12%. If your quotes still use last year’s labour assumptions, you’re under-pricing, and if you want help running the numbers, you can book a call.
This article is general information, not advice. Always check your specific award and obligations with the Fair Work Ombudsman or your advisor. See the latest minimum wage update and pay guides for exact rates.
Outline
What changed this year in plain English
Where award wage changes hit your job costs
A quick method to reset labour rates in your quote templates
How to communicate rate rises to clients without a blow-up
Checklist: all the levers to update, not just base rates
Signs your margin model needs a rebuild
FAQ
What changed this year in plain English
The Fair Work Commission’s 2025 Annual Wage Review lifted the National Minimum Wage and all modern award minimums by 3.5%, effective from the first full pay period on or after 1 July 2025.
The Commission’s determinations updated each award’s pay tables and apply to classifications, apprentices and juniors. (Fair Work Commission.)
Separately, the super guarantee rate moved to 12% on 1 July 2025, and must be applied to all eligible ordinary time earnings paid on or after that date. Australian Taxation Office.
For practical, award-specific numbers, use the current Pay Guides for your award and classification. Fair Work Ombudsman.
Where award wage changes hit your job costs
For trade businesses, labour drives a big chunk of job cost. A 3.5% increase to award rates rarely shows up as a neat 3.5% increase to total labour cost, because on-costs move with it.
Base hourly rate for permanent staff at each classification.
Casual loading that is often 25% under many awards, calculated on the new base rate, and you should check your award’s pay guide for the exact loading.
Penalty rates and overtime multipliers, which apply to the updated base rate.
Allowances indexed in many awards, such as industry, travel, tools and fares, which are updated in pay guides each year.
If you price labour as a charge-out rate per hour, rebuild that rate from the bottom up using the new inputs, and if you need a structured review cadence, our Accounting & Advisory team can help you implement it.
A quick method to reset labour rates in your quote templates
Here’s a simple approach we use with clients to keep GP% intact when award wage changes land:
Confirm the award and level for each role, for example Level 3 electrician or 2nd-year apprentice, using the latest pay guide.
Calculate the true hourly cost: base hourly rate plus allowances commonly incurred plus leave loading if applicable plus super at 12% plus payroll on-costs you actually carry, such as workers comp premiums, payroll processing and uniforms. Use your own real costs, because the award tables do not include your business-specific overheads.
Add productive utilisation: divide by the real billable utilisation for that role, for example 75% after travel, training and meetings, not 100%.
Layer overhead recovery: add a per-hour slice of off-site overhead, such as admin, rent, software and utes, so jobs carry their share, and keep assumptions visible to avoid disputes.
Set the target GP%: once you have the charge-out rate, check that your typical job mix still delivers the GP% you are aiming for each month, or consider a reset with targeted Business Coaching.
If quotes vary a lot by job, document these updated labour assumptions in your standard quote template and scope notes. Business Queensland’s quoting guide is a useful checklist for what to include in a quote and how to avoid disputes.
How to communicate rate rises to clients without a blow-up
Be specific, not vague: “We have updated labour rates to reflect the 1 July 2025 award increase and super now at 12%” lands better than “costs are up.” Australian Taxation Office.
Give notice windows: for maintenance contracts or service agreements, cite the clause and effective date, then provide the new schedule of rates, aligned to the official change date. Fair Work Ombudsman.
Offer options: sequence works, value-engineer materials, or adjust scope to hold budget without eroding your GP%, and if you want a draft email or rate card, reach us via Sunshine Coast or Cairns.
Checklist: update these levers now
Use this as a once-per-year routine each July, then review quarterly.
Awards and classifications: confirm each role and level against current pay guides.
Base rates: update permanent and casual base rates in payroll and quote templates.
Allowances: refresh commonly used allowances, such as travel, fares, industry and tools, and how they are applied in your scopes.
Penalty and overtime: ensure weekend, evening and overtime multipliers reflect the new base rate.
Super: set the SG rate at 12% and check it applies to the right earnings types.
On-costs: update workers comp rates and payroll processing assumptions in your charge-out model using your actual policies.
Utilisation: re-check rostered hours against billable hours and adjust your utilisation assumption.
Overheads: recut your overhead recovery per hour as your rent, insurance and software change.
Templates and software: push new rates into job management and quoting systems so estimators cannot select the old ones.
Client comms: issue a clear effective-date notice for contracts and publish the new schedule of rates, then keep an eye on future updates via our News.
Signs your margin model needs a rebuild
GP% slips 2 to 3 points in July and August compared to April and May with no scope change.
Service calls or small jobs routinely miss margin while project work holds.
Estimators are “fixing” rates line by line to win work, which creates inconsistency.
Your quote assumptions sheet has not been touched since last year’s review.
If any of these ring true, you are probably carrying hidden wage inflation, so consider a focused session to rebuild your model with Accounting & Advisory.
Practical example, quick math
Say your Level 3 qualified tech was $32.00 per hour base last year and is now 3.5% higher. That becomes $33.12 per hour before allowances and on-costs. Add casual loading if applicable per the pay guide for accurate casual rates. Fair Work Ombudsman.
Apply 12% super to ordinary time earnings, then your actual on-costs and utilisation to arrive at the charge-out rate that preserves your GP%. Australian Taxation Office.
Bring it together
Award wage changes are predictable. Margin erosion is optional. Set a yearly habit on 1 July, update your model, communicate clearly, and keep your GP% steady month to month, and if you want a second set of eyes on your pricing, our Business Coaching program can pressure-test your numbers.
FAQ
Do award wage changes apply if we already pay above award?
Yes. If you pay above award, check that your over-award amount still clears the new minimums for the correct classification.
When do the new rates apply to our payroll?
From the first full pay period starting on or after 1 July 2025, not the first day you process in July.
How do we handle fixed-price quotes accepted before 1 July?
Unless your contract allows price variation for award changes, you will usually need to honour the accepted price, so protect future quotes with clear variation clauses. See Business Queensland’s guidance on quoting terms.
What about apprentices and juniors?
Their minimums moved too, so use the current pay guide for your specific award and year level.
Do we need to lift our charge-out rate by exactly 3.5%?
Not necessarily. Build from costs up, include new base rates, allowances, super at 12%, on-costs, utilisation and target GP%, then set your rate accordingly.