Compensation cap rises to $95,050: what changes for your business on 1 July

If you employ people in Australia, this Wednesday matters. From 1 July 2026, the maximum compensation for an unfair dismissal claim climbs to $95,050, the high-income threshold lifts to $190,100, minimum and award wages go up, and payday super finally kicks in. None of it is optional, and most of it lands on the same day. Here’s the plain-English version of what’s changing — and, more to the point, what I’d be doing about it if I were sitting in your office.

The short version — the numbers that matter

Now let me walk through the bits that actually trip people up.

Unfair dismissal: the cap, and who can actually claim

The headline figure is the compensation cap rising to $95,050. But here’s the part I see business owners get wrong: that’s a ceiling, not a default payout. The Fair Work Commission can only award the lesser of 26 weeks of the employee’s pay or half the high-income threshold (which is where the $95,050 comes from). For most small business roles, 26 weeks of wages sits well under that cap — so $95,050 is rarely the number you’d actually face. It’s just the number that makes headlines, and the number a disgruntled ex-employee will wave at you.

The quieter change is the high-income threshold lifting to $190,100. If an employee isn’t covered by an award or enterprise agreement and earns above that figure, they generally can’t bring an unfair dismissal claim at all. Because the threshold creeps up every year, a few of your higher earners who were sitting just above the old line may now fall just under the new one — which means they can claim. It’s worth knowing exactly where your salaried people land before you make any big decisions about them.

The fix is boring and it works: a fair process, written down. If you’ve got someone you’re managing out, do it properly — follow a real performance management process and keep your records. That single habit does more to protect you from an unfair dismissal claim than any dollar figure in a table.

Wages: the increase, and the date trap

The National Minimum Wage rises about 6% to $1,004.90 a week, or $26.44 an hour. Modern award minimum rates go up 4.75% across the board. If you pay anyone at or near the minimum — or you run “all-inclusive” salaries that are meant to absorb award entitlements — this is your cue to check the maths, because an annual salary that comfortably covered the award last year might not this year.

Here’s the trap. The increase applies from the first full pay period starting on or after 1 July — not necessarily on 1 July itself. If your pay week starts on a Wednesday, then yes, 1 July is your day. But if your fortnight started on, say, 29 June, your team stays on the old rates until the next full pay period begins. Get this wrong and you’ve either underpaid (a real problem) or jumped the gun (an avoidable headache). If award rates make your head spin, that’s exactly what a Wage & Award Sprint or some modern award interpretation is for.

Payday super: the big operational shift

This is the one I’d be paying attention to if your payroll process is held together with sticky tape. From 1 July, you have to pay super at the same time as wages — every payday — and the contribution has to land in your employee’s fund within 7 business days. Worth flagging: that’s business days, not calendar days. An earlier draft of the law said calendar, and plenty of commentary still gets it wrong, so don’t let a well-meaning blog talk you into a tighter deadline than the law actually sets.

A few things to keep front of mind:

• The super guarantee rate stays at 12%. That part doesn’t change.
• For a brand-new employee (or one who’s just changed funds), you get a longer 20 business days for that first contribution.
• The ATO’s Small Business Superannuation Clearing House closes on 30 June 2026. If you’ve relied on it, you need a SuperStream-compliant alternative sorted before then — not on 1 July.
• Clearing houses take a few days to process, so don’t leave the payment to day 7. Start it on day 4 or 5 so it actually lands in time.

Miss the deadline and the Superannuation Guarantee Charge kicks in — and late super paid through that charge isn’t tax-deductible. Quarterly habits simply won’t survive contact with this regime, so the time to test your process is now, not in your first July pay run. While you’re in there, it’s a good moment to make sure the rest of your payroll compliance is in order, given underpayment is now a criminal matter.

And a small one: filing fees

The fee to lodge an unfair dismissal, general protections, bullying or sexual harassment application rises from $89.70 to $92.70. Minor in dollar terms — but a handy reminder that the real cost of a claim is your time, your stress and your attention, not the lodgement fee. Which is exactly why getting the process right up front pays for itself many times over.

Your quick 1 July checklist

1. Identify anyone paid at or near the minimum or an award rate, and confirm their new rate.
2. Check when your first full pay period on or after 1 July starts — that’s your real changeover date.
3. Review your salaried staff against the new $190,100 threshold.
4. Confirm your super solution works without the SBSCH, and that contributions will land within 7 business days.
5. If you’ve got a performance or exit situation brewing, get the process right before you act, not after.

The honest take

I won’t pretend none of this is a hassle — payday super in particular is a genuine change to how your money moves through the month. But none of it is a reason to panic. The businesses that get caught out usually aren’t the ones who didn’t know; they’re the ones who knew and meant to get to it. A couple of hours of attention now saves a very bad afternoon later.  If you’d rather not work through it on your own, that’s honestly what I’m here for. Have a look at Small Business HR Support if you want someone in your corner year-round, grab a quick gut-check with Ask Paulette: a 20-minute HR power call, or just book a free, no-obligation chat and we’ll work out where you stand together.

About the author

Paulette McCormack is the founder of Fresh HR Insights, a Gold Coast HR and industrial relations consultancy supporting small and medium businesses across South East Queensland and beyond. With more than 20 years in HR and IR — and experience as a university lecturer in the field — Paulette helps owners stay compliant and handle the tricky people situations without an in-house HR team. When you call Fresh HR Insights, you get Paulette, not a call centre. 

General information only and not legal advice. Figures are current as at 26 June 2026 and take effect from 1 July 2026; always check your specific award, agreement and circumstances.