Salary packaging health and the national minimum wage: a guide

Salary packaging health and the national minimum wage

Salary packaging health is a common way for employees to reduce their taxable income by sacrificing part of their salary for health-related expenses such as private health insurance, medical bills, or hospital costs. However, it is important to understand that salary packaging is not a wage floor or a pay rate. The legal minimum wage in Australia is set by the Fair Work Commission, and salary packaging does not change the obligation to pay at least the minimum wage.

The legal minimum wage

From 1 July 2026, the adult national minimum wage is $26.44 per hour, or $1,004.90 per week for a 38‑hour ordinary week. Casual employees receive a loading of 25%, bringing the casual minimum to $33.05 per hour. These rates apply to national‑system employees who are not covered by a modern award or an enterprise agreement. If you are covered by an award, the award rate may be higher than the national minimum. The Fair Work Ombudsman provides guidance on which award applies to your industry.

Salary packaging health does not affect the minimum wage you must receive. Your employer must still pay you at least the applicable minimum wage in cash or salary before any salary sacrifice arrangement. Salary sacrifice reduces your taxable income but does not reduce the gross wage that counts towards the minimum wage obligation.

How salary packaging health compares with other pay concepts

It is useful to separate the legal minimum from other figures:

• Legal minimum: As above, $26.44 per hour for adults.
• Award rate: If you are covered by a modern award, your minimum pay is set by that award. From the first full pay period on or after 1 July 2026, award minimum wages rise by 4.75%, but the lowest ongoing classification cannot fall below the national minimum. An introductory rate for the first six months cannot be less than $25.74 per hour or $978.10 per week.
• Survey average: The Australian Bureau of Statistics (ABS) reported that in May 2026, full‑time adult ordinary‑time earnings averaged $2,083.70 per week, and all employees averaged $1,579.20 per week. These are averages, not minimums.
• Negotiated salary: Some employees negotiate a salary above the minimum, which may include salary packaging arrangements. However, no specific market rate for salary packaging health is available in the reference used for this guide.

Super guarantee and salary packaging health

Employers must pay super guarantee of 12% on top of ordinary time earnings. Salary packaging health does not reduce the super guarantee obligation because super is calculated on the employee's ordinary time earnings, which includes any salary sacrificed amounts. So if you salary package health expenses, your super contributions are still based on your pre‑sacrifice salary.

When a higher rate applies

If you are covered by a modern award or an enterprise agreement, the award or agreement rate may be higher than the national minimum. Your employer must pay you at least that higher rate. Salary packaging health is a separate arrangement and does not allow an employer to pay less than the applicable minimum.

Award‑free juniors and other categories

For award‑free employees under 21, junior percentage rates apply. For example, a 17‑year‑old award‑free employee must be paid at least $15.29 per hour (or $19.11 casual). These percentages are based on the adult minimum. Salary packaging health is still possible for juniors, but the cash wage after sacrifice must not fall below the junior minimum.

Apprentices and trainees have their own rates under the Miscellaneous Award.

Historical context

The national minimum wage has increased over recent years. From 1 July 2023 it was $23.23 per hour, rising to $24.10 on 1 July 2024, $24.95 on 1 July 2025, and $26.44 on 1 July 2026. These increases reflect the Fair Work Commission's annual review. Salary packaging health arrangements are not tied to these increases; they are a separate tax concession.

No market rate for salary packaging health

The reference used for this guide does not contain a specific figure for salary packaging health. Salary packaging is not a wage or salary; it is a method of structuring pay. Therefore, we cannot provide a median, average, or typical rate for salary packaging health. The legal floor is the national minimum wage, and any salary packaging must comply with that floor.

State system considerations

The national rates described here apply to national‑system employees who are award‑free and agreement‑free. Most private‑sector employees are in the national system. However, some state public sector and local government employees, and some Western Australian sole traders and partnerships in the state system, are covered by state awards instead. If you are in the state system, different minimum rates may apply.

Rounding note

The adult weekly national minimum is published as $1,004.90. Multiplying $26.44 by 38 gives $1,004.72, an 18‑cent difference due to rounding in the order. The published weekly figure is the authoritative one. Casual weekly figures on this site are the published casual hourly rate times 38 ordinary hours, with no penalty rates.

Internal links

For more information on which minimum wage applies to you, see Which minimum wage applies. To understand how the figures on this site are calculated, see How the figures work.

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