Can salary packaging reduce my pay below the minimum wage?

No. Your employer must ensure that after any salary sacrifice arrangement, your base salary or wage still meets or exceeds the applicable minimum wage or award rate. The Fair Work Ombudsman enforces this.

Does salary packaging affect my super guarantee?

Generally, super guarantee is calculated on your ordinary time earnings (OTE), which may be reduced by salary sacrifice for some purposes, but not for general living expenses in most cases. The ATO provides specific rules.

Are there special rules for salary packaging in not-for-profit sectors?

Yes, certain not-for-profit employers can offer salary packaging for general living expenses up to a capped amount tax-free. However, the minimum wage floor still applies.

General living expenses salary packaging and the national minimum wage

The national minimum wage from 1 July 2026 is $26.44 per hour, but salary packaging for general living expenses must not reduce an employee's base pay below this floor.

General living expenses salary packaging and the minimum wage

General living expenses salary packaging allows employees to sacrifice part of their pre-tax salary to pay for everyday costs such as rent, groceries, or utilities. This arrangement is commonly available in the not-for-profit sector and can reduce taxable income. However, it does not change the fundamental requirement that every employee must receive at least the applicable minimum wage or award rate. The national minimum wage from 1 July 2026 is $26.44 per hour, or $1,004.90 per week for a full-time adult employee. Superannuation guarantee of 12% is paid on top of ordinary time earnings.

Separating the legal minimum from other rates

The legal floor

The Fair Work Commission sets the national minimum wage. From 1 July 2026, the adult rate is $26.44 per hour, $1,004.90 per week. Casual employees receive a 25% loading, making the casual rate $33.05 per hour. These rates apply to national-system employees who are award-free and agreement-free. Most private-sector employees are in the national system. Some state public sector and local government employees, and some Western Australian sole traders and partnerships, are covered by state awards instead.

Award rates

Modern awards set minimum wages for specific industries and occupations. From the first full pay period on or after 1 July 2026, modern award minimum wages rise by 4.75%, but the lowest ongoing classification cannot sit under the national minimum. An introductory rate limited to the first six months cannot sit under $25.74 per hour or $978.10 per week. A modern award or enterprise agreement can require a higher rate than the national minimum. Apprentice and trainee rates for award-free employees follow the Miscellaneous Award, not the junior percentages.

Survey averages

The Australian Bureau of Statistics (ABS) May 2026 survey reports full-time adult ordinary-time earnings of $2,083.70 per week, and all employees average total earnings of $1,579.20 per week. These are averages, not legal floors. They reflect what many workers actually earn, including overtime and bonuses.

Negotiated salaries

Employers and employees can agree on a salary above the minimum. Salary packaging for general living expenses is often part of such negotiated arrangements, particularly in the not-for-profit sector. The negotiated salary must still meet the minimum wage or award rate before any packaging is applied.

How salary packaging interacts with the minimum wage

Salary packaging does not change the minimum wage obligation. The employee’s base salary (the amount before salary sacrifice) must be at least the applicable minimum wage or award rate. After packaging, the cash pay may be lower, but the employer still pays the full salary to the packaging provider. The Fair Work Ombudsman states that salary sacrifice cannot reduce an employee’s entitlement to the minimum wage. For example, if an award rate is $26.44 per hour, the employee’s base rate must be at least that, even if they choose to sacrifice part of it for general living expenses.

Superannuation guarantee is generally calculated on ordinary time earnings (OTE). Salary sacrifice for general living expenses does not reduce OTE for super purposes in most cases, but specific rules apply. The ATO provides guidance on what counts as OTE.

Age-based and other variations

Award-free junior employees have lower minimum percentages of the adult rate. For example, a 16-year-old receives 47.3% of $26.44, or $12.51 per hour (casual $15.64). These rates are the legal floor; salary packaging cannot reduce them further. Apprentices and trainees have separate rates under the Miscellaneous Award.

Internal resources

For more detail on which pay floor applies to you, see Which minimum wage applies. For current rate tables including junior and casual rates, see Rate tables.

Important note

This guide provides orientation only. It is not a pay determination, tax advice, or legal advice. The adult weekly national minimum is the published $1,004.90 figure. Multiplying $26.44 by 38 lands 18 cents lower because of rounding in the order. Casual weekly figures on this site are the published casual hourly rate times 38 ordinary hours, with no penalty rates.

For the published floors, see the rate tables and how the figures work.