Can my annualised salary be less than the national minimum wage?

No. An annualised salary must be at least equal to what the employee would have received under the relevant award or the National Minimum Wage if no award applies. The Fair Work Ombudsman explains that an annualised wage arrangement must not be less than the amount the employee would have earned from wages and other entitlements for the work performed during the year. If the salary falls short, the employer must pay the difference.

How often must an annualised salary be reviewed?

Awards that allow annualised wages typically require a review every 12 months, or when the arrangement or employment ends if earlier. The review checks whether the total paid was at least what the employee would have been entitled to under the award. If not, the employer must top up the shortfall. This is set out in the award rules, as noted by the Fair Work Ombudsman.

Does superannuation apply to an annualised salary?

Yes. From 1 July 2026, the superannuation guarantee rate is 12% of ordinary time earnings, and employers must pay super at the same time as wages. The super contribution is on top of the annualised salary amount. The Fair Work Ombudsman confirms that super is an employer payment on top of pay, not part of the salary itself.

Annualised salary and the minimum wage: what you need to know

The national minimum wage from 1 July 2026 is $26.44 per hour or $1,004.90 per week, but an annualised salary must cover all award entitlements and be reviewed annually.

Understanding annualised salary in Australia

An annualised salary is a fixed annual amount paid to an employee in regular instalments, often covering multiple entitlements such as minimum pay rates, penalty rates, overtime, allowances, and annual leave loading. This arrangement is common under certain modern awards and enterprise agreements, and can also be set out in an employment contract as a contractual offsetting arrangement. The key point is that an annualised salary must not leave the employee worse off than if they had been paid under the relevant award or the National Minimum Wage.

What is an annualised salary?

The Fair Work Ombudsman defines an annualised wage as a fixed regular amount paid each pay period over a year, as an alternative to hourly pay . Awards that allow annualised wages contain specific rules about what entitlements can be covered, maximum hours before additional payments are due, and the requirement to review the arrangement annually. A contractual salary, on the other hand, may also offset award entitlements, but the employer must still ensure the employee receives at least the minimum pay for each pay period and that the total is not less than award entitlements over the year.

How it compares to the national minimum wage

The national minimum wage from 1 July 2026 is $26.44 per hour or $1,004.90 per week for adult employees not covered by an award or agreement . However, an annualised salary is not simply compared to this hourly rate. Instead, the salary must cover all award entitlements for the hours worked. For example, if an employee works overtime or on weekends, the annualised salary must be enough to compensate for the penalty rates they would have received under the award. The Fair Work Ombudsman states that an annualised wage must not be less than the amount the employee would have received from wages and other entitlements under the award for the work performed during the year.

Award rules and annualised wages

Awards that allow annualised wages, such as the Clerks Award, Hospitality Award or Manufacturing Award, set out the specific rules. These include rules about maximum penalty rate or overtime hours before an additional payment is needed. The annualised wage must be reviewed every 12 months to ensure compliance. If the actual award entitlements exceed the salary paid, the employer must pay the difference. This is a legal requirement under the Fair Work Act and the relevant award.

Contractual salary offsetting

Some employers use a contractual salary that is not under an award annualised wage clause. This is known as a contractual offsetting arrangement. The Fair Work Ombudsman notes that such a salary can cover minimum entitlements, but the employer must still pay in full each pay period and at least monthly. The salary must be at least the National Minimum Wage if no award applies, or the award minimum if covered. The employer must keep records to show the salary covers all entitlements.

Superannuation on annualised salary

Superannuation is an employer payment on top of the annualised salary. From 1 July 2026, the super guarantee rate is 12% of ordinary time earnings, and must be paid at the same time as wages (payday super). The Fair Work Ombudsman reminds employers that super is not part of the salary itself but an additional contribution. When comparing an annualised salary to award rates, super is not included in the comparison; it is a separate obligation.

Checking if your annualised salary is compliant

To check compliance, employers should:

Identify the applicable award or agreement.
Calculate what the employee would have earned under the award for all hours worked, including penalties, overtime, allowances, and annual leave loading.
Compare that total to the annualised salary paid over the year.
If the salary is less, pay the difference.
Review the arrangement at least annually.

Employees can use the Fair Work Ombudsman's Pay and Conditions Tool to estimate award entitlements. For award-free employees, the National Minimum Wage applies, but juniors, apprentices, and trainees may be paid less.

For more guidance, see Which minimum wage applies and Rate tables for current award rates.

Important distinctions

The Fair Work Commission sets the national minimum wage; the Fair Work Ombudsman explains and enforces it.
An annualised salary is not the same as an hourly wage; it must cover all entitlements.
Casual employees receive a 25% loading on top of the minimum wage ($33.05 per hour from 1 July 2026), but annualised salaries for casuals must also account for this.
Junior employees, apprentices, and trainees have lower minimum rates under awards or the National Minimum Wage.

The ABS May 2026 data shows full-time adult ordinary-time earnings average $2,083.70 per week, well above the national minimum, indicating that most employees earn more than the floor. However, an annualised salary must still be checked against the specific award.