You have about three weeks. The Fair Work Commission announced its 2026 Annual Wage Review on 2 June, and every award pay rate in your venue — base, casual, weekend, public holiday, overtime — must be re-set from the first full pay period on or after 1 July 2026 (Fair Work Commission, 2026). The headline rise is 4.75%, but penalty rates multiply it through the very hours restaurants trade. And since intentional underpayment became a criminal offence, "she'll be right" is no longer a payroll strategy. This guide walks through how to get it right, step by step.
Key takeaways
- Award minimum wages rise 4.75% from the first full pay period on or after 1 July 2026, and the National Minimum Wage rises 6% to $26.44 an hour (ABC News, 2026).
- The real cost to hospitality is bigger than 4.75% in dollar terms. Restaurant & Catering Australia estimates the minimum impact for a hospitality business at close to $56.96 per worker per week, because penalty rates compound the base rise through evenings, weekends and public holidays (Wangaratta Chronicle, 2026).
- Penalty rates are multipliers, not suggestions: under the Restaurant Industry Award, full-time and part-time staff earn 125% on Saturday, 150% on Sunday and 225% on public holidays; casual rates run higher because the 25% loading is built in (AHA Victoria, 2025).
- A flat hourly rate doesn't make penalty rates go away. An "all-inclusive" rate is only lawful if it leaves every employee better off than the award for every pay period — this is the single most common trap.
- Intentional underpayment is now criminal — for an individual, up to 10 years in prison and fines of up to 3 times the underpayment (Fair Work Ombudsman, 2025). Honest mistakes aren't a crime, but they still have to be paid back.
What changed on 2 June 2026?
The Fair Work Commission's expert panel increased minimum award wages by 4.75%, effective from the first full pay period commencing on or after 1 July 2026 (Wangaratta Chronicle, 2026). The National Minimum Wage rises further — by 6%, from $24.95 to $26.44 per hour, or $1,004.90 for a 38-hour week (ABC News, 2026).
For your venue, the award increase is the one that matters: nearly every restaurant, cafe and takeaway employee in Australia is paid under a modern award, and "all modern award minimum wages will be increased by 4.75%" (Piper Alderman, 2026).
Why does a 4.75% rise hurt hospitality more than other industries? Because your busiest trade is exactly when penalty rates apply. R&CA national president John Hart put it plainly: "penalty rates compound the base rate across the very hours our venues trade" (Wangaratta Chronicle, 2026). In dollar terms, the minimum award wage rises about $45.57 a week — but R&CA's estimate, as reported by the Wangaratta Chronicle, puts the minimum impact for a hospitality business at close to $56.96 per worker per week, and higher again for many venues.
Here's how to work through it for your own roster.
Step 1: Confirm which award covers your venue
Most stand-alone restaurants, cafes and takeaways are covered by the Restaurant Industry Award (MA000119). Venues attached to a hotel, pub or accommodation business are usually under the Hospitality Industry (General) Award (MA000009) instead. Both awards rise 4.75% on the same date, but their penalty tables differ in places — so check which one actually applies before you touch a single rate. The Fair Work Ombudsman's find-my-award tool settles it in a few minutes.
Everything below uses the Restaurant Industry Award, since that's what covers most independent venues.
Step 2: Classify every employee correctly
Penalty rates are percentages of an employee's minimum hourly rate, and that rate depends on their classification level — from Introductory through Level 6. A kitchen hand washing dishes, a grade 2 food and beverage attendant taking orders, and a trade-qualified chef de partie all sit at different levels with different base rates.
Two classification mistakes cause most underpayments:
- Wrong level. A waiter who mixes drinks, trains juniors or takes reservations may belong at a higher grade than the one on their contract. Classifications follow the duties actually performed, not the job title.
- Wrong employment type. Casual, part-time and full-time staff have different rates and different rules. A casual must be paid "a loading of 25% in addition to the minimum hourly rate" for every hour worked (Restaurant Industry Award 2020, MA000119). Part-timers need a written agreement covering guaranteed hours and availability — without one, extra hours can quietly become overtime.
Write down every employee's classification level and employment type before 1 July. It's the input for every other step.
Step 3: Apply the right penalty rate multipliers
Once classification is right, the multipliers are mechanical. Under the Restaurant Industry Award, the penalty rates are (AHA Victoria, 2025):
| When | Full-time & part-time | Casual (loading included) |
|---|---|---|
| Monday–Friday | 100% | 125% |
| Saturday | 125% | 150% |
| Sunday | 150% | 150% (Intro–Level 2) / 175% (Levels 3–6) |
| Public holiday | 225% | 250% |
Three things owners regularly get wrong here:
- Casual percentages already include the 25% loading. A casual's Saturday rate is 150% of the base — you don't add another 25% on top. Stacking the loading onto the penalty is double-paying; quietly assuming the penalty "covers" a separate loading you never paid is underpaying.
- The casual Sunday rate splits by level. Junior classifications (Introductory to Level 2) get 150%; Levels 3 to 6 get 175%.
- Late and early shifts carry extra loadings. Work between 10pm and midnight on weekdays adds $2.81 per hour, and midnight to 6am adds $4.22 per hour, on top of the hourly rate (2025–26 figures; Fair Work Ombudsman, 2026). These flat amounts are updated with the award — check the new pay guide before your first July roster.
Step 4: Re-cost a real week, not the headline percentage
To see the compounding effect, we ran the numbers for this guide on one casual food and beverage attendant working a typical week: two 6-hour weekday shifts, plus 8 hours Saturday and 8 hours Sunday — 28 hours on the floor.
At Level 2 casual rates, those 28 hours are paid as: 12 weekday hours at 125%, 8 Saturday hours at 150% and 8 Sunday hours at 150%. That's the equivalent of 39 base-rate hours of wages for 28 worked. When the base rate rises 4.75% on 1 July, the rise applies to all 39 of those equivalent hours — which is why the dollar impact lands so much harder than the headline suggests, and why R&CA's $56.96-a-week minimum estimate exceeds the $45.57 rise in the bare minimum award wage (Wangaratta Chronicle, 2026).
Run this calculation for every roster slot now, with the 4.75% applied, so you know your new weekly wage bill before it hits. Don't hand-build a rate table from percentages, though — the Fair Work Ombudsman publishes updated pay guides and a Pay and Conditions Tool with the official post-July dollar figures. Use those as your source of truth; the rounding is theirs, not yours.
Step 5: Check overtime and the flat-rate trap
Overtime under the Restaurant Industry Award kicks in beyond rostered hours, beyond an average of 38 hours a week over the roster cycle, or beyond daily limits. It's paid at its own multipliers on top of the new base rates — and it's where "we just pay everyone $35 an hour, all-in" falls apart.
The phrase that turns up in almost every hospitality underpayment story is some version of "we pay a flat rate, it all works out". A flat or "all-inclusive" hourly rate is only lawful if the total amount paid leaves the employee at least as well off as the award for each pay period — including every penalty hour, loading and overtime hour they actually worked. A rate that comfortably covers a quiet week underpays a week heavy with Sunday and public-holiday shifts. The award does allow a formal annualised wage for full-time staff, but it must be "at least 25% more than the minimum wages prescribed in clause 18 multiplied by 52", in writing, with reconciliation rules. Even then, it only stretches to cover an average of 18 penalty-rate hours a week (Restaurant Industry Award 2020, MA000119).
If you pay flat rates, 1 July is the forcing function: re-test every one of them against the new award rates across your actual rosters, and keep the comparison on file.
Step 6: Get super and payday timing right
Two more 1 July changes ride along with the wage rise. The super guarantee stays at 12% for 2026–27 (ATO, 2026) — but it's now calculated on bigger wages, so your super bill rises with the award. And with the introduction of Payday Super, "from 1 July 2026 the minimum super guarantee is calculated as a percentage of each eligible employee's qualifying earnings" and employers "must pay super guarantee for each payday" (ATO, 2026) — not quarterly. If your cash flow is built around quarterly super, July changes that too.
Step 7: Keep records that prove you got it right
Every step above only protects you if you can show your working. Keep written classification records, signed part-time hours agreements, rosters against payslips, and your flat-rate reconciliations. Payslip and record-keeping breaches now carry sharply higher civil penalties in their own right.
Small operators get one genuine safe harbour: the Voluntary Small Business Wage Compliance Code. A small business employer "can't be referred for criminal prosecution" by the Fair Work Ombudsman if they've underpaid an employee but the FWO is "satisfied that they've complied with the Code" (Fair Work Ombudsman, 2025). Download it, work through it, and keep the evidence — it's the cheapest insurance in hospitality.
What happens if you get it wrong?
Since 1 January 2025, "intentional underpayment of wages or entitlements can be a criminal offence" (Fair Work Ombudsman, 2025). For an individual, conviction carries up to 10 years in prison, a fine of up to the higher of 3 times the underpayment or $1.65 million, or both; for a company, the maximum fine is the higher of 3 times the underpayment or $8.25 million.
The law is explicit that honest mistakes aren't criminal — but a mistake you were warned about and never fixed starts to look intentional. The owner who keeps paying February's rates in August, or keeps a flat rate that hasn't been re-tested in years, is carrying exactly that risk. Three weeks of admin now is cheap by comparison.
Where this fits in your 2026 cost stack
The wage rise isn't arriving alone. On 1 July your wage bill steps up; on 1 October 2026 the card surcharge ban lands, ending the separate surcharge line on your bills — our surcharge-ban checklist for Australian restaurants walks through the absorb-or-reprice decision. Add what the aggregators already take — covered in our teardown of what Uber Eats and DoorDash really cost Australian restaurants — and the second half of 2026 squeezes margin from three directions at once.
You can't negotiate with the Fair Work Commission, but you can choose where your sales come from. Every order that arrives through your own website instead of a delivery app keeps the commission — often 30% — in the till, which pays for a lot of weekend penalty rates. If your venue still doesn't have its own ordering page, an AI builder like DineHere can turn a menu photo into a working site in about ten minutes; the point is owning a channel where the margin stays yours. Payroll is a cost you must get right; commissions are a cost you can actually cut.
FAQ
What are penalty rates under the Restaurant Industry Award?
Penalty rates are higher pay rates for working particular hours or days — evenings, weekends, public holidays and overtime. Under the Restaurant Industry Award they're set as percentages of the employee's minimum hourly rate: for full-time and part-time staff, 125% on Saturday, 150% on Sunday and 225% on public holidays (AHA Victoria, 2025).
When does the 4.75% increase actually start?
From the first full pay period on or after 1 July 2026. If your pay week runs Wednesday to Tuesday, the new rates apply from the first Wednesday in July — not part-way through a pay cycle.
Does the increase apply to my staff if I already pay above award?
Only the award minimums rise. If your actual rates still sit above the new minimums for every hour type — including weekends and public holidays — nothing forces a change. But re-check: a margin that was comfortable last July may have been swallowed by two annual rises.
Do casuals get penalty rates on top of casual loading?
No — under the Restaurant Industry Award, the casual penalty percentages already include the 25% loading. A casual's Saturday rate of 150% is the whole entitlement; you don't pay 150% plus another 25% (AHA Victoria, 2025).
What does a casual get on a Sunday?
It depends on their level: 150% of the minimum hourly rate for Introductory to Level 2 classifications, and 175% for Levels 3 to 6, with the casual loading included in both figures.
Can I just pay a flat hourly rate instead?
Only if the flat rate leaves the employee at least as well off as the award for every pay period, counting all penalties, loadings and overtime they actually worked. A formal annualised wage arrangement is available for full-time staff but must be at least 25% above the weekly minimum, recorded in writing and reconciled (Restaurant Industry Award 2020, MA000119).
Which award covers my cafe — Restaurant or Hospitality?
Stand-alone restaurants, cafes and takeaways are generally under the Restaurant Industry Award (MA000119); venues operating within hotels, pubs or accommodation businesses usually fall under the Hospitality Industry (General) Award (MA000009). Both rise 4.75% from 1 July 2026, but check coverage with the Fair Work Ombudsman's find-my-award tool before setting rates.
Is underpaying staff really a criminal offence now?
Yes — since 1 January 2025, intentional underpayment can be a criminal offence, with penalties for individuals of up to 10 years in prison and fines up to the higher of 3 times the underpayment or $1.65 million (Fair Work Ombudsman, 2025). Honest mistakes are excluded, but must still be repaid.
How does the super guarantee change on 1 July 2026?
The rate stays at 12%, but Payday Super begins: super is calculated on each payday's qualifying earnings and must be paid each payday rather than quarterly (ATO, 2026). Budget for super leaving your account with every pay run.
Where do I find the exact dollar rates for my staff?
Use the Fair Work Ombudsman's Pay and Conditions Tool and the updated Restaurant Industry Award pay guide once the post-July rates are published. They give the official dollar figure for every classification, employment type and hour type — use them rather than calculating your own from percentages.
