Does not for profit salary packaging reduce the minimum wage I must be paid?

No. Salary packaging is a tax arrangement that lets you pay for certain items with pre-tax income. It does not reduce the minimum wage your employer must pay. The legal floor—the national minimum wage or any applicable award—still applies in full. Your employer must pay at least that rate (or a higher award or agreement rate if higher) before any packaging is applied.

Can my employer pay me below the award rate if I have salary packaging?

No. Salary packaging cannot be used to justify paying less than the minimum award rate or the national minimum wage. The Fair Work Ombudsman enforces these minimums. If a modern award or enterprise agreement applies, your base pay must meet that rate. Salary packaging is separate and does not lower your legal wage.

How does not for profit salary packaging affect my superannuation?

Superannuation is calculated on your ordinary time earnings (OTE), which is generally your base salary or wages. Salary packaging arrangements that reduce your taxable income may also reduce your OTE if they are salary sacrifice. However, the super guarantee (currently 12%) is still paid on that reduced OTE. Your employer must pay super on top of your base pay, not on the packaged amount. Check your award or agreement for any specific rules.

Not for Profit Salary Packaging and the Minimum Wage: How It Affects Your Pay Floor

The legal minimum wage from 1 July 2026 is $26.44 per hour or $1,004.90 per week, with super on top. Salary packaging does not change this legal floor.

Not for Profit Salary Packaging and the Minimum Wage

If you work in the not-for-profit sector, you may have access to salary packaging—a tax concession that allows you to pay for certain expenses (like rent, mortgage, or living costs) with pre-tax income. This can increase your take-home pay, but it does not change the legal minimum wage your employer must pay you. Understanding how the pay floor works is essential, especially when you compare your rate to the national minimum or an award.

The Legal Minimum: Award Coverage vs Award-Free

Australia’s minimum wage system has two main branches: award-covered employees and award-free employees. Most private-sector workers are covered by a modern award that sets a minimum rate for their industry and role. If you are award-free (no award or enterprise agreement applies), the national minimum wage is your floor. From 1 July 2026, that rate is $26.44 per hour or $1,004.90 per week for an adult. Casual employees get a 25% loading, making it $33.05 per hour. Superannuation (12%) is paid on top of these amounts by your employer.

If you are covered by a modern award, the award’s minimum classification rate applies. That rate cannot be lower than the national minimum. Some awards have introductory rates for the first six months, which are $25.74 per hour or $978.10 per week from 1 July 2026. Juniors, apprentices, and trainees have their own lower rates under awards or the Miscellaneous Award for award-free employees. Salary packaging does not affect any of these legal minimums.

How Salary Packaging Interacts with Your Pay

Salary packaging is a voluntary arrangement between you and your employer. It reduces your taxable income, which can lower the tax you pay. However, it does not reduce the gross wage your employer must pay. Your employer must still pay at least the minimum wage (or higher award/agreement rate) before any packaging deductions. The packaged amount is taken from your pre-tax pay, but your base rate must meet the legal floor.

For example, if your award rate is $28 per hour, your employer must pay you at least $28 per hour gross. If you salary package $15,000 per year, that $15,000 is deducted from your taxable income, but your hourly rate remains $28. The packaging does not lower the rate your employer reports to the ATO or pays you in cash. It only affects your tax calculation.

Award Coverage and Salary Packaging

If you are covered by a modern award, your award may have specific clauses about salary packaging. Some awards allow it, others restrict it. Always check your award or enterprise agreement. The Fair Work Ombudsman provides guidance on how awards treat packaging. Even if your award permits packaging, the minimum wage under that award still applies. You cannot agree to be paid below the award rate in exchange for packaging benefits.

For award-free employees, the national minimum wage is the only floor. Salary packaging is permitted as long as your gross pay (before packaging) meets or exceeds $26.44 per hour. Your employer must also pay super on your ordinary time earnings, which may be reduced if you salary sacrifice part of your salary. But the minimum wage itself is not negotiable.

What the Figures Show

The ABS May 2026 data shows full-time adult ordinary-time earnings at $2,083.70 per week, well above the minimum. But many not-for-profit workers are paid closer to award rates. The national minimum wage increase to $26.44 from 1 July 2026 is a 4.75% rise from the previous $24.95. This applies to all award-free adults and as a backstop for award-covered employees. Salary packaging does not change this figure.

If you are unsure whether you are award-free or covered by an award, see Which minimum wage applies for guidance. For detailed rate tables, visit Rate tables. Remember, salary packaging is a tax benefit, not a wage reduction. Your legal minimum is your safety net.

Key Takeaways

The national minimum wage from 1 July 2026: $26.44 per hour, $1,004.90 per week, casual $33.05 per hour. Super on top.
Award rates can be higher. Introductory rates are $25.74 per hour for the first six months.
Salary packaging does not lower the minimum wage. Your employer must pay at least the legal floor.
Juniors, apprentices, and trainees have lower rates. See Guides for more.
The Fair Work Commission sets the national minimum; the Fair Work Ombudsman enforces it.

If you have further questions, explore Topics on this site. Always check your award or agreement for specific rules on salary packaging.