July 1 just happened. The Fair Work Commission’s 4.75% wage increase is now in effect, pushing the National Minimum Wage to $26.44 per hour, and lifting every award rate above it by the same percentage. If your business pays staff under a Modern Award, those numbers changed from your first full pay period on or after 1 July 2026.

The uncomfortable question: do your rostering and payroll systems reflect that? Most SMB owners using Tanda or Deputy assume the software handles it. The tools do handle a lot. But there’s a gap between what the software automates and what stays your legal responsibility, and that gap is exactly where underpayments happen.

What changed on 1 July 2026

The Fair Work Commission announced its decision on 2 June 2026. From the first full pay period starting on or after 1 July 2026, two things changed:

Award minimum rates went up 4.75% across the board. The floor, the lowest rate applicable to ongoing employment, is now $1,004.90 per week or $26.44 per hour. Entry-level rates for the first six months of employment sit at $978.10 per week ($25.74/hr).

That 1 July date matters, but not the way some employers assume. If your pay period started before 1 July, the old rates apply through the end of that period. The increase kicks in from the start of the next full pay period. A weekly pay period running Monday to Sunday means an employee whose period started Monday 30 June runs at the old rates until the following Monday, 7 July.

For businesses on fortnightly pay cycles that started in mid-June, you may have a period or two still running at the old rates. Check your payroll software for the exact cut-over date.

What Modern Award compliance actually requires

Modern Awards aren’t just about the base hourly rate. An award-compliant roster and payroll has to account for:

Penalty rates. Working on weekends, public holidays, evenings, or early mornings typically attracts loading on top of the base rate. Under the General Retail Industry Award, for example, Saturday work for a full-time employee attracts a 25% loading. Sunday is 100%. Public holidays are 250%. These percentages apply to the updated base rate, so if you haven’t updated the base, all derived penalty rates are also wrong.

Overtime. Most awards set a threshold, often 38 ordinary hours per week, after which overtime rates apply. Some awards also have daily overtime triggers. A roster that pushes an employee past those thresholds without triggering the correct rate creates an underpayment even if the shift itself was approved.

Breaks. Under most awards, employees working more than four hours in a shift are entitled to a paid 10-minute rest break. Shifts over five hours require an unpaid meal break of at least 30 minutes. Missing breaks isn’t just an HR problem, failing to provide them can be an award breach.

Allowances. Awards include specific allowances for things like split shifts, working in extreme temperatures, or using a personal vehicle. These aren’t automatic in most rostering tools, they usually need to be configured.

Minimum engagement. Most awards set a minimum number of hours per shift. Under the Hospitality Industry General Award, casual employees generally must be engaged for a minimum of two hours per shift. Rostering someone for 90 minutes and only paying for that time is an underpayment.

All of this sits on top of the wage rate. Software can automate most of it, but only if it’s configured correctly for your specific award and your specific employees.

What AI rostering tools handle, and what they don’t

Tanda (now rebranded Workforce.com in Australia) and Deputy are the two tools most commonly used by Australian SMBs for award-aware rostering. Both do meaningful work on compliance. Both leave specific things to you.

What Tanda handles automatically: Tanda maintains over 30 individually managed Modern Award templates, covering major Australian awards including the Hospitality Industry General Award (HIGA), the General Retail Industry Award (GRIA), and more. When a new pay period starts and award rates change, Tanda’s compliance team updates those templates. Base rates, overtime, allowances, penalty rates, minimum engagement, public holiday rates, and rest breaks are all within the engine’s scope. The system visualises how each timesheet is being interpreted, so you can see exactly which rate applied to each hour worked. Tanda’s own marketing describes the approach as “strength in numbers”, the same templates used by thousands of employers in your industry, which means errors get caught across a wide user base.

What Deputy handles automatically: Deputy auto-fills key award entitlements for each employee including penalty rates, overtime, and allowances. It covers the most common awards for hospitality, retail, and professional services, and says it regularly updates its award library as Fair Work rules change. Its Pay Rate Builder lets you configure custom rate rules for enterprise agreements or non-standard arrangements. The system also flags overscheduling and breaks, though break reminders are more of a scheduling tool than a compliance enforcer.

The gap, what neither tool can do for you:

Neither Tanda nor Deputy knows which award actually applies to your employees. That determination is yours, and it isn’t always obvious. An employee can be covered by a different award than you expect if their duties have changed, if your business spans multiple industries, or if you’ve misclassified their employment type. Once you assign the wrong award template to an employee, the software calculates correctly against the wrong rules.

Both platforms also require correct employee classification, level or grade within the award. An employee doing Level 3 work under the HIGA who’s set up at Level 2 will be underpaid even if every other calculation is right.

Custom allowances often need manual setup. If your award includes an allowance specific to your industry or situation, check that it’s configured, don’t assume it’s on by default.

And the platforms update award templates on their own schedule. In the days immediately following a July 1 change, it’s worth confirming the update has actually been applied to your account rather than assuming it happened automatically.

The 4 checks to run this week

1. Confirm the wage update is live in your system. Log into Tanda or Deputy, pull up the award template for your business, and verify the base rate shows the updated figure from 1 July 2026. If you’re on a hospitality or retail award, the base rate for a full-time Level 1 employee should reflect the 4.75% increase. If it’s unchanged, contact support, template rollouts can sometimes lag a day or two after the effective date.

2. Verify employee award classifications. Open the profile for each employee and check the award level or classification assigned. Cross-reference with what each person actually does day to day. A barista who’s been gradually taking on supervisory tasks may have moved from Level 1 to Level 2 under the HIGA without anyone updating their classification. That’s a live underpayment.

3. Run a pay comparison on recent timesheets. Pull timesheets from the last two pay periods and compare the calculated gross pay against what the correct award rate would produce. Most rostering platforms have a cost report or wage breakdown view that shows rate per hour by shift. Look for any shifts where the calculated rate appears lower than expected, particularly weekend or evening shifts where penalty rates should apply.

4. Check your custom allowances are configured. If your award includes allowances relevant to your business, a split shift allowance, a meal allowance, a uniform allowance, check that those are active in your award template settings. They often require manual activation and won’t appear just because they’re in the award.

If you find an underpayment, what now?

Finding an underpayment isn’t the end of the world. Handling it correctly, promptly, is what matters.

Back-pay the employee in full, as soon as practicable. Keep clear records of what was underpaid, over what period, and how you calculated the remedy amount.

The stakes if you don’t self-correct, or if an underpayment is found through a Fair Work Ombudsman investigation, are real. Under current civil penalty rules, a small business (under 15 employees) faces up to $99,000 per contravention. For serious contraventions, where the court finds you knew about the underpayment or were reckless, the ceiling rises to $990,000 per contravention.

From 1 January 2025, intentional underpayment of wages became a criminal offence under the Fair Work Act. Honest, corrected mistakes aren’t treated as criminal, but the Voluntary Small Business Wage Compliance Code exists specifically to give small employers a clear path to demonstrate they acted in good faith. If you’ve found something and you’re unsure of your exposure, read the Code at fairwork.gov.au before contacting the FWO directly.

The practical lesson: self-correction, properly documented, is always better than being found out.

Sources

Fair Work Ombudsman, Minimum wages increase from 1 July 2026, fairwork.gov.au
Fair Work Ombudsman, Litigation, civil penalty amounts, fairwork.gov.au
Fair Work Ombudsman, Criminalising wage underpayments, fairwork.gov.au
Fair Work Ombudsman, Penalty rates, fairwork.gov.au
Tanda, Industry Award Interpretation, tanda.com.au
Deputy, Award Interpretation & Fair Work Compliance, deputy.com/au
Norton Rose Fulbright / Global Workplace Insider, Fair Work Commission wage decision 2026, 2 June 2026, globalworkplaceinsider.com