Meals and Entertainment Salary Packaging and Your Minimum Wage Obligations

Meals and Entertainment Salary Packaging: What It Is and What It Isn’t

Meals and entertainment salary packaging is a common fringe benefit arrangement where an employee agrees to forgo part of their pre-tax salary in exchange for the employer providing meal entertainment (food, drink, and associated travel or accommodation) or recreation benefits (amusement, sport, or leisure activities). Under Australian Taxation Office (ATO) rules, certain entertainment-related benefits are excluded from reportable fringe benefits if they are not provided through salary packaging. But when they are packaged, the employer must report them and may be liable for fringe benefits tax (FBT).

This guide focuses on how this tax arrangement interacts with Australia’s minimum wage system. Many people mistakenly think salary packaging can lower the wage they must pay, but that is not the case.

The Legal Minimum Wage Floor

The Fair Work Commission sets the national minimum wage each year. From the first full pay period on or after 1 July 2026, the adult national minimum wage is $26.44 per hour or $1,004.90 per week for a 38‑hour week. Casual employees receive a loading of 25%, making the minimum $33.05 per hour. These rates apply to award‑free and agreement‑free national‑system employees.

However, not every worker must receive $26.44 per hour. Junior employees (under 21), apprentices, trainees, and employees on introductory award rates (limited to the first six months) can be paid less. For example, a 17‑year‑old award‑free junior is entitled to 57.8% of the adult rate, or $15.29 per hour ($19.11 casual). Supported wage rates apply for employees with disability.

If a modern award or enterprise agreement covers the employee, the award or agreement sets the minimum. Award rates are often higher than the national minimum. The Fair Work Commission’s Modern Awards Pay Database provides current classification rates, allowances, and penalty rates. Employers must always pay at least the applicable award or agreement rate, regardless of any salary packaging arrangement.

Separating the Legal Minimum from Other Figures

It is important to distinguish the legal minimum from survey averages and negotiated salaries. The Australian Bureau of Statistics (ABS) reported in May 2026 that full‑time adult ordinary‑time earnings averaged $2,083.70 per week, and all employees’ average total earnings were $1,579.20 per week. These are much higher than the minimum wage because they include overtime, bonuses, and higher‑paid occupations. They are not a floor.

Similarly, a negotiated salary in a contract or enterprise agreement may be above the award rate. Salary packaging for meals and entertainment can be part of that negotiated package, but it cannot bring the base pay below the legal minimum. The ATO’s reporting exclusion for entertainment‑related benefits (meal entertainment and associated benefits) only affects FBT reporting, not wage compliance.

Super Guarantee: An Employer Payment on Top

When discussing pay, remember that superannuation guarantee contributions are an employer payment on top of ordinary time earnings. From 1 July 2026, the super guarantee rate is 12%. For an employee earning the national minimum wage of $1,004.90 per week, the employer must contribute an additional $120.59 per week to super. Salary packaging for meals and entertainment generally does not reduce the super guarantee obligation because the sacrificed amount is usually included in ordinary time earnings for super purposes. Always verify with the ATO’s guidance on ordinary time earnings.

Common Confusions

A frequent mix‑up is thinking that because meals and entertainment benefits can be excluded from reportable fringe benefits (when not salary packaged), the employer can avoid paying the minimum wage on that portion. That is wrong. The exclusion is a tax reporting rule, not a wage rule. The Fair Work Ombudsman enforces the minimum wage, and the ATO administers FBT. They are separate.

Another confusion is assuming that salary packaging automatically reduces the employee’s taxable income for all purposes. While it reduces income tax, it does not reduce the minimum wage obligation. The employee must still receive at least the legal minimum in cash or benefits (or a combination) after the sacrifice. If the packaged benefit is a non‑cash benefit, the employer must ensure the total value of cash plus benefits meets the minimum.

Practical Steps for Employers

• Determine which pay floor applies: national minimum wage, modern award, or enterprise agreement. Use the Fair Work Ombudsman’s Pay and Conditions Tool or check the Which minimum wage applies guide.
• Ensure the employee’s base salary (before any sacrifice) is at or above that floor.
• If salary packaging meals and entertainment, confirm the arrangement does not breach the award or agreement. Some awards have specific rules about salary sacrifice.
• Calculate super guarantee on ordinary time earnings, including the sacrificed amount if required.
• Report packaged entertainment benefits correctly to the ATO. The ATO’s reporting exclusion for entertainment‑related benefits applies only to benefits not provided through salary packaging. If you package them, you must report them.

For detailed rates, see our Rate tables.

Final Note

This guide provides an orientation only. It is not a pay determination, tax advice, or legal advice. The national minimum wage figures are based on the Fair Work Commission’s 2026 Annual Wage Review. Modern award rates are available from the Fair Work Commission’s Modern Awards Pay Database. Always consult the relevant award or agreement and seek professional advice for your specific situation.

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