June 2026 employment update: wage increases, FWC reform and Victoria's new work from home right

Three significant workplace relations developments are on employers’ radar this month: a substantial wage increase flowing from the Fair Work Commission’s Annual Wage Review, new legislation aimed at reshaping how the Commission tackles its surging caseload and the introduction of Victoria’s new working from home right.

Fair Work Commission Annual Wage Review

The Fair Work Commission (Commission) has handed down its Annual Wage Review decision, which represents one of the most significant wage adjustments in recent years. From the first full pay period on or after 1 July 2026, all modern award minimum wages will increase by 4.75 per cent per cent, and the National Minimum Wage (NMW) will increase by 5.97 per cent, from $948.00 per week ($24.95/hr) to $1,004.90 per week ($26.44/hr).

The Commission has also commenced the phased abolition of the C13 classification. Employees currently classified at this level will receive an additional increase beyond the 4.75 per cent adjustment (to meet the NMW), as part of a transition to the higher C12 rate of pay. Corresponding adjustments will also be made to the C14 classification, an entry-level rate that applies for a limited initial period of employment. The Commission has indicated that the phasing out of the C13 classification (and equivalent in other modern awards) will require classification descriptors to be redrafted as part of future award review processes.

Employers should confirm that wage rates for award-covered employees at least meet the new minimum rates from the first full pay period on or after 1 July 2026. Award increases also affect allowances expressed as a percentage of the standard wage rate, which must be adjusted accordingly. Enterprise agreement rates should also be reviewed – in particular, rates under agreements that have passed their nominal expiry date and contain no mechanism for ongoing increases. Where award rates have overtaken agreement rates, employers may need to adjust base pay to ensure compliance. 

Changes to Fair Work Commission procedures

The Federal Government has introduced the Workplace Relations Legislation Amendment (Building Cooperative Workplaces No. 1) Bill 2026 (BCW Bill) largely in response to a significant rise in the Commission’s caseload. This increase has been attributed in part to the growing use of AI in Commission applications, with preliminary Commission research suggesting up to two in every five unfair dismissal and general protections claims are now being filed with AI assistance.

The BCW Bill will allow the Commission to:

• deal with general protections applications based on an alleged dismissal, without first making a determination of whether there has been a dismissal;
• determine matters involving contested facts without a conference or hearing where it can do so adequately on the papers and both parties consent;
• prevent applicants whose claims are frivolous, vexatious or lack reasonable prospects from making further applications without permission; and
• delegate to Commission staff the power to issue certificates to progress matters to arbitration or court.

The BCW Bill also:

• allows the Commonwealth to prefer employers with enterprise agreements in procurement and grants and streamlines renewal of supported bargaining authorisations where they are less than two years old; and
• sets a different high-income threshold for regulated road transport contractors to account for higher gross earnings (and thereby restores access to unfair contract protections).

While the vexatious litigant and “on the papers” measures may assist the Commission to manage its workload, employers are unlikely to see any meaningful reduction in the volume of low-merit, AI-assisted applications it currently faces.

Indeed, concerns that the Commission is not doing enough to discourage unmeritorious claims are unlikely to be addressed by these reforms. Removing the obligation to determine at first instance whether a dismissal has occurred – before a general protections claim can proceed – effectively transfers that burden to the courts rather than resolving it.

Late last week the Commission also proposed changes to its Rules. While largely procedural in nature, employers should note the requirement that applications for approval of enterprise agreements be accompanied by an “original digital copy” of the proposed enterprise agreement – a document in Word or RTF format or a PDF document created or exported from work processing software (but not scanned PDF documents). This will likely mean that employers will need to file both the PDF scanned copy of the proposed agreement (to include the relevant signatures) and the “original digital copy.” 

Victoria's "Work from Home" right

The Victorian Government has introduced the Equal Opportunity Amendment (Work from Home) Bill 2026 (WFH Bill). If passed, the WFH Bill will create a statutory right for eligible employees to work from home two days per week (or on a pro rata basis for employees who work less than 38 hours per week) from 1 September 2026, or 1 July 2027 for small businesses (those employing fewer than 15 employees). 

The WFH Bill covers both public and private sector employees with some limited exceptions, including those on probation, apprentices, trainees, interns, graduates, work experience participants, certain Fair Work Act-regulated workers and contractors, or casual employees who are not employed on a regular and systematic basis. The proposed right would also not apply to an employee who:

• has qualifying circumstances under section 65(1A) of the Fair Work Act;
• would like to change their working arrangements because of those circumstances; and
• is otherwise entitled to make a request for flexible working arrangements under section 65 of that Act.

That said, it is possible that employees could tailor the reasons for their request so that it falls within the more beneficial Victorian regime. 

Employees intending to work from home must give written notice to their employer specifying the days and times they intend to work from home and, if they intend to work from a place other than their private residence, that place. An eligible employee is not required to specify days or times if this is not practicable. An employer may only permit an employee to work from home for fewer than two days per week where it is not reasonable for the employee to do so as requested, however the employer must still permit working from home to the greatest extent that is reasonable. In assessing reasonableness, only the following matters may be considered:

• the inherent requirements of the employee's role, including whether those requirements can be satisfied on particular days or at particular times without in-person attendance at the regular workplace, use of workplace equipment, or in-person interaction with members of the public or the employer's clients or customers;
• the impact on the employer, including whether working from home on particular days or at particular times would be likely to:
  • cause a significant decrease in productivity or efficiency;
  • adversely affect any person's safety;
  • have a significant adverse impact on supervision, training or professional development;
  • have a significant adverse impact on the employee's capacity to build relationships with stakeholders, clients or customers;
  • have a significant adverse impact on customer service outcomes;
  • have a significant adverse impact on confidentiality or data protection;
  • impose excessive financial costs on the employer;
  • require impractical changes to the working arrangements of the employee or any other employee; or
  • require impractical new hirings.

Employers managing underperforming employees may be able to rely on a number of the reasonableness factors – including, for example, supervision, training and professional development – as grounds for refusal. 

Employers must respond in writing within 21 days stating whether they consider it reasonable for the employee to work from home as set out in the notice. Where the employer does not, the response must specify the alternative arrangement it will allow (including the days and times) and the reasons, or state that it will not allow the employee to work from home at all and give reasons. 

Disputes will be dealt with under the Equal Opportunity Act 2010 (Vic), and employees may bring complaints to the Victorian Equal Opportunity and Human Rights Commission or the Victorian Civil and Administrative Tribunal. 

Employers will also be required to meet reasonable costs necessary to enable eligible employees to work from home, including the cost of essential equipment (such as hardware and software) and secure access to the employer’s information systems. 

To prepare for these proposed changes, employers should review their work from home policies, assess which roles may be eligible for the proposed entitlement, consider how requests will be managed and documented, identify any operational factors relevant to the statutory reasonableness criteria, and evaluate the costs and infrastructure required to support employees working from home. 

If you would like to discuss how these proposed changes may affect your organisation, or require assistance reviewing your current practices, please contact us.