Does salary continuance affect my minimum wage entitlement?

No. Salary continuance is an insurance benefit that replaces part of your income if you cannot work due to illness or injury. It does not replace your minimum wage entitlement. Your employer must still pay you at least the applicable minimum wage (or award rate) for any work you perform. If you are on leave and receiving salary continuance, that payment is separate from wages.

Can my salary continuance payment be less than the national minimum wage?

Yes, because salary continuance is not a wage. It is typically a percentage of your salary (e.g., 75%) and may be less than the minimum wage. However, if you are working reduced hours while on a return-to-work plan, your employer must pay you at least the minimum wage for the hours you actually work. The salary continuance top-up is separate.

Is superannuation paid on salary continuance payments?

Generally, no. The superannuation guarantee requires employers to contribute 12% of ordinary time earnings. Salary continuance insurance payments are not ordinary time earnings because they are not paid for work performed. However, if you are on paid leave and your employer continues to receive your normal salary (not an insurance payment), super may still be payable. Check your award or agreement.

Salary Continuance and the Minimum Wage: Award Coverage vs Award-Free Rates

The Fair Work Ombudsman and Fair Work Commission do not set a specific rate for salary continuance; it is a private insurance benefit, but the underlying wage must meet the applicable minimum wage or award rate.

Salary Continuance and the Minimum Wage in Australia

Salary continuance (also called income protection insurance provided by an employer) is a benefit that pays you a portion of your salary if you cannot work due to illness or injury. It is not a wage or salary set by the Fair Work Commission or the Fair Work Ombudsman. Instead, it is a private arrangement, often part of a superannuation fund or an employer-paid policy. This article explains how salary continuance interacts with Australia's minimum wage system, including award coverage and award-free rates.

The Legal Minimum Wage Floor

All employees in Australia are entitled to a minimum wage. For employees not covered by a modern award or registered agreement, the national minimum wage applies. From 1 July 2026, the national minimum wage is $26.44 per hour or $1,004.90 per week for a 38-hour week (before tax). Casual employees receive a 25% loading, making the casual rate $33.05 per hour. These rates are set by the Fair Work Commission and enforced by the Fair Work Ombudsman.

Most employees, however, are covered by a modern award. Awards set minimum pay rates that are often higher than the national minimum wage. From 1 July 2026, award minimum wages increased by 4.75%, but the lowest ongoing classification in any award cannot fall below the national minimum wage ($26.44/h or $1,004.90/week). Introductory rates (for the first six months) must be at least $25.74/h or $978.10/week.

Which minimum wage applies.

Award Coverage vs Award-Free Employees

If you are covered by an award or enterprise agreement, your minimum pay is determined by that document. If you are award-free and not covered by an agreement, you are award-free, the national minimum wage applies. Award-free juniors, apprentices, and employees with a disability may have lower rates (e.g., a 16-year-old award-free junior earns $12.51/h). The Fair Work Ombudsman explains that award rates can be higher than the national minimum.

Salary continuance does not change this. If you are on salary continuance, your underlying salary must still meet the minimum wage for any work performed. If you are on paid leave and receiving salary continuance, that payment is not a wage. The employer must ensure that any wages paid (if any) meet the award or national minimum.

Superannuation on Top

When discussing pay, remember that the superannuation guarantee requires employers to pay 12% of ordinary time earnings on top of wages. Salary continuance payments are not ordinary time earnings. If you are on paid leave and your employer continues to pay your normal salary (not insurance), super may still be payable. Check your award or agreement.

Rate tables.

What the Research Shows

The Fair Work Ombudsman and Fair Work Commission do not publish a specific rate for salary continuance. The Australian Bureau of Statistics and the Australian Taxation Office also do not set a standard salary continuance amount. It is a private insurance product. Therefore, no single figure can be given. The only relevant floor is the minimum wage or award rate that applies to the employee's role.

Practical Example

Suppose you are an award-free adult employee earning $60,000 per year (about $30.30/h). Your employer provides salary continuance insurance that pays 75% of your salary if you are unable to work. If you become ill and cannot work, you may receive $45,000 per year from the insurance. This is less than the national minimum wage annualised ($26.44 x 38 x 52 = $52,253). However, because you are not working, the minimum wage does not apply to that period. If you return to work part-time, your employer must pay you at least the minimum wage for the hours you actually work.

Guides.

Summary

Salary continuance is not a wage. It does not replace the minimum wage entitlement for work performed. The key takeaway: your base salary must meet the applicable minimum wage or award rate. Salary continuance is an additional benefit. Always check your award or agreement for any specific provisions about salary continuance and superannuation.

How the figures work.

Important Note

This article is for general information only. It does not constitute legal or financial advice. For your specific situation, consult the Fair Work Ombudsman or a qualified professional.