Does salary continuance cover count towards my minimum wage entitlement?

No. Salary continuance cover is an income protection insurance product, not wages. The Fair Work Act requires employers to pay at least the minimum wage in money, not in kind. Insurance benefits do not satisfy that obligation. Your award or agreement may also set a higher minimum cash rate.

Can an employer pay less than the minimum wage because I have salary continuance cover?

No. The minimum wage applies regardless of any insurance arrangements. An employer cannot offset the cost or value of salary continuance cover against the cash wage. If you are award-covered, the award rate is the floor; if award-free, the national minimum wage applies. Both must be paid in full before tax.

Is salary continuance cover subject to superannuation guarantee contributions?

Generally, no. The superannuation guarantee is calculated on an employee's ordinary time earnings (OTE). Salary continuance premiums paid by the employer are not OTE, and benefits paid to the employee are not wages. The Australian Taxation Office provides guidance on what counts as OTE. For specific circumstances, seek professional advice.

Salary continuance cover and the minimum wage: award coverage versus award-free rates

As of 1 July 2026, the national minimum wage is $26.44 per hour or $1,004.90 per week for adult award-free employees, with higher rates under awards or agreements.

Salary continuance cover and the minimum wage

Salary continuance cover is an insurance product that replaces a portion of your income if you cannot work due to illness or injury. It is not a wage, a salary sacrifice arrangement, or a substitute for the minimum wage. This guide explains how salary continuance cover fits alongside Australia's pay floors, the difference between award-covered and award-free employees, and what the law requires.

The legal minimum wage

Australia's minimum wage system has two main layers. The Fair Work Commission sets the national minimum wage each year. From 1 July 2026, the national minimum wage is $26.44 per hour or $1,004.90 per week for an adult employee working 38 ordinary hours . This rate applies to employees who are not covered by a modern award or an enterprise agreement (award-free and agreement-free).

Most employees, however, are covered by a modern award. The Fair Work Ombudsman explains that awards set minimum pay rates for specific industries and occupations, and those rates are often higher than the national minimum wage . The Fair Work Commission publishes a Modern Awards Pay Database with the calculated minimum rates, allowances, and penalty rates for each award .

Award coverage versus award-free rates

If you are covered by a modern award, your minimum wage is the rate in that award for your classification. That rate cannot be lower than the national minimum wage, but it can be higher. Some awards include introductory rates for new employees, which are limited to the first six months and must be at least $25.74 per hour or $978.10 per week from 1 July 2026.

If you are award-free, the national minimum wage applies. But even then, the rate is not the same for everyone. Junior employees (under 21) receive a percentage of the adult rate. For example, a 17-year-old award-free junior gets 57.8% of the national minimum, or $15.29 per hour. Apprentices and trainees have their own special rates based on the Miscellaneous Award. Casual employees receive a 25% loading on top of the base rate, making the casual national minimum $33.05 per hour.

How salary continuance cover fits in

Salary continuance cover is a negotiated benefit, not a legislated entitlement. It is typically offered as part of an employment contract or an enterprise agreement. The premium may be paid by the employer or the employee. If the employer pays the premium, it is not considered wages and does not count towards the minimum wage obligation.

The minimum wage must be paid in cash (before tax). An employer cannot reduce your cash wage because you have salary continuance cover. Similarly, if you receive a benefit from a salary continuance policy while unable to work, that payment is insurance proceeds, not wages. Your award or agreement may still require the employer to make superannuation contributions on your ordinary time earnings during that period, but the insurance benefit itself is not subject to super.

Survey averages and negotiated salaries

The Australian Bureau of Statistics (ABS) reported that in May 2026, full-time adult ordinary-time earnings averaged $2,083.70 per week. That is a survey average, not a minimum. Many employees earn more than the minimum wage because their award rate is higher, or because they have negotiated a salary above the award. Salary continuance cover is often linked to a percentage of that negotiated salary, typically 75% of pre-disability income.

Negotiated salaries can include salary continuance cover as a component of the total remuneration package. However, the cash component must still meet the minimum wage or award rate. An enterprise agreement can set a higher minimum than the award, but it cannot undercut the award.

Superannuation on top

Employers must pay the superannuation guarantee of 12% on ordinary time earnings. This is on top of the minimum wage or award rate. Super is not paid on salary continuance premiums or benefits. If you are award-free and earning the national minimum wage, your employer must contribute an additional 12% of your ordinary time earnings to your super fund.

What to watch out for

Salary continuance cover does not replace the minimum wage. You must still receive at least the award rate or national minimum wage in cash.
If you are covered by an award, check the award for any specific provisions about insurance or deductions. Some awards allow deductions for insurance premiums, but only if the employee agrees in writing and the deduction does not bring the cash wage below the minimum.
The Fair Work Ombudsman's Pay and Conditions Tool can help you find the correct minimum wage for your award .
For award-free employees, the national minimum wage order sets special rates for juniors, apprentices, and employees with disability. These rates are lower than the adult rate, but salary continuance cover does not change that.

Summary

Salary continuance cover is a valuable insurance product, but it is not a wage. The minimum wage you must receive depends on whether you are covered by an award or are award-free. The national minimum wage from 1 July 2026 is $26.44 per hour for adults, with higher rates under awards. Superannuation is paid on top. For more details, see Which minimum wage applies and Rate tables.

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