Around 2.6 million Australians will receive a pay rise next month.

That's because the Fair Work Commission has increased both the minimum and award wages by 3.75 per cent.

Here's what you need to know, including who will benefit and when.

How much is the minimum wage?

The national minimum wage is $23.23 an hour or $882.80 for a week at the moment. 

But it's increasing by 3.75 per cent on July 1. 

What is the minimum wage?

The national minimum wage is the lowest rate an employer can legally pay their employees in Australia.

It's set by the Fair Work Commission, the country's industrial relations tribunal.

The minimum wage acts like a safety net for Australian employees who aren't covered by an award or agreement.

What's an award?

Awards are industry or occupation-based and cover most occupations and about one-fifth of the workforce, or roughly 2.4 million workers, the commission says. 

They outline the following conditions of work:

• Minimum pay rates
• Penalty rates, overtime and casual rates
• Leave
• Hours of work
• Allowances

People covered by industry awards are generally entitled to higher wages than the national minimum.

Some people have a lower minimum wage, even if they're covered by an award, depending on their age or work capacity.

This includes:

Who will get the 3.75 per cent pay rise?

People on the national minimum wage and people earning the minimum rate stipulated by their industry's award. 

The commission says 20.7 per cent of employed Australians are paid at the applicable minimum wage rates.

Some other workers covered by enterprise agreements will also see their pay rise as a result of the decision to ensure it remains above minimum award conditions. 

That means the increase will affect "about a quarter of all Australian employees".

How do I know if I'm earning minimum wage?

First off, check your pay slip. 

See if it matches the current national minimum wage of $23.23 an hour or $882.80 for a week.

If it doesn't match, you might be on an award.

You can find the minimum rates you are entitled to by finding your award (if you're covered by one) on the Fair Work Ombudsman's website.

If your pay slip lines up with the rates outlined by your award, then you can conclude you're earning the minimum rate for that award.

If the figures on your pay slip are bigger than that, you're earning more than the minimum wage — lucky you! 

I'm on the minimum wage. How much more will I earn after the increase?

The hourly rate is now set to rise to $24.10 per hour.

If you work a 38-hour week, this means you'll earn $913.91, which is an increase of around $33.

But these numbers refer to gross pay – which is the amount you earn before tax is taken out.

Your actual take-home pay will be about $781.91 a week if you work 38 hours. 

If you're on a different rate stipulated by an award, your pay will still increase by 3.75 per cent from its current level. 

When will I get the pay rise?

The changes will come into effect on July 1 – the start of the next financial year.

Until then, you'll keep earning your current rate.

Why is the minimum wage rising?

Fair Work reviews the minimum pay rates over a period between March and June each year, taking submissions from experts and interested groups like unions and employer representatives.

Factors like living standards, costs and workforce participation are major considerations for determining the minimum rates.

Unions had argued for a 5 per cent increase but the Fair Work Commission ruled it was "not appropriate" to raise award wages "by any amount significantly above the inflation rate". 

One leading employer group, the Australian Chamber of Commerce and Industry, had argued for a wage increase no greater than 2 per cent, which the Commission rejected as it would have resulted in a real (after inflation) pay cut for award and minimum wage workers.