Does a novated lease reduce my minimum wage entitlement?

No. The national minimum wage is a gross amount that must be paid before any salary sacrifice deductions, including a novated lease. Your employer must pay you at least $26.44 per hour (or the applicable award rate if higher) in ordinary time earnings. The salary packaging arrangement reduces your taxable income for tax purposes, but it does not lower the legal pay floor.

How is super calculated when I salary sacrifice for a novated lease?

The super guarantee is 12% of your ordinary time earnings, paid by your employer on top of your gross wage. Salary sacrifice amounts (such as novated lease payments) are generally included in ordinary time earnings for super purposes, meaning your employer still pays super on the sacrificed amount. However, the on-site reference does not detail specific salary packaging rules; consult the ATO or your employer for your exact situation.

Can my employer pay me less than the minimum wage if I have a novated lease?

No. A novated lease is a voluntary arrangement between you, your employer, and a finance company. It does not change your minimum wage entitlement. Your employer must still pay you at least the national minimum wage (or the relevant award or enterprise agreement rate) in gross ordinary time earnings. The lease payments are deducted from your after-tax or pre-tax salary, but the gross wage must meet the legal floor.

Novated lease salary packaging and the minimum wage: what counts as your pay packet

The national minimum wage of $26.44 per hour ($1,004.90 per week) is the legal floor before any salary packaging deductions; super of 12% is paid on top of ordinary time earnings.

Novated lease salary packaging and the minimum wage

When you arrange a novated lease through your employer, part of your pre-tax salary is used to cover car expenses. This reduces your taxable income but does not change the fundamental rule: your employer must pay you at least the legal minimum wage in gross ordinary time earnings. 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 (38 ordinary hours). Superannuation of 12% is paid on top of those ordinary time earnings.

The legal floor is gross pay before packaging

The Fair Work Commission sets the national minimum wage. The Fair Work Ombudsman explains and enforces it. That rate applies to national-system employees who are not covered by a modern award or enterprise agreement. If you are award-free and agreement-free, your employer cannot pay you less than $26.44 per hour (or the applicable junior, apprentice, or supported wage rate). A novated lease does not alter this obligation. Your gross wage – the amount before any salary sacrifice deduction – must meet the minimum.

Separating the minimum from averages and negotiated rates

The legal minimum is a floor. The ABS May 2026 survey shows average full-time adult ordinary-time earnings of $2,083.70 per week – well above the minimum. Many employees earn more under an award, an enterprise agreement, or an individual contract. A modern award or enterprise agreement can require a higher rate than the national minimum. If you have a novated lease, your negotiated salary is likely above the minimum, but the packaging arrangement affects your tax, not your minimum wage compliance.

How the weekly packet looks with tax and super

Using the national minimum as an example: a full-time adult earns $1,004.90 per week in gross ordinary time earnings. The employer also pays $120.59 in super (12% of $1,004.90) on top. From the gross wage, tax and Medicare are withheld. For the 2026-27 tax year, a resident with the full tax-free threshold and no other adjustments would pay roughly $1,000 in tax and $200 in Medicare over the year on this weekly amount (using the ATO shade-in thresholds). A novated lease reduces the taxable income, so less tax is withheld, but the gross wage remains the same. The super contribution is unaffected because it is calculated on ordinary time earnings, which include salary sacrifice amounts.

When lower rates apply

Not every worker receives $26.44 per hour. Juniors, apprentices, trainees, and employees on introductory award rates can be paid less. For award-free juniors, the percentages range from 36.8% at under 16 to 97.7% at age 20. Apprentice and trainee rates for award-free employees follow the Miscellaneous Award. Supported wages for people with disability may also be lower. A novated lease is available to any employee who meets the employer’s criteria, but the pay floor that applies to you depends on your age, classification, and any applicable award or agreement.

Where to find more information

For a full list of current rates, see the Rate tables. To understand which minimum wage applies to your situation, visit Which minimum wage applies. The Guides section explains how awards and agreements interact with salary packaging. Remember, this site provides orientation only – it is not a pay determination or tax advice.

Key takeaway

A novated lease salary packaging arrangement does not lower the minimum wage your employer must pay you. The legal floor is your gross ordinary time earnings before any salary sacrifice. Super is paid on top of those earnings. If you are considering a novated lease, check that your gross wage meets the applicable minimum and that your employer is complying with super obligations. For specific tax effects, consult the ATO or a qualified adviser.