Salary Packaging Not for Profit and the National Minimum Wage: What You Need to Know

Salary Packaging Not for Profit and the Minimum Wage

Salary packaging (also called salary sacrifice) is a common benefit in the not-for-profit sector. It allows you to pay for certain expenses—such as a car, laptop, or additional super contributions—from your pre-tax salary, reducing your taxable income. But how does this affect your pay floor? This guide explains the interaction between salary packaging and Australia's minimum wage, using the latest figures from the Fair Work Commission and the Australian Taxation Office.

The Legal Minimum: What Employers Must Pay

The Fair Work Commission sets the national minimum wage each year. From 1 July 2026, the adult national minimum wage is $26.44 per hour or $1,004.90 per week for a 38-hour week. Casual employees receive a 25% loading, making the casual rate $33.05 per hour. These are the absolute minimums for award-free and agreement-free employees in the national system. Most private-sector employees are covered by a modern award or enterprise agreement, which can set higher rates. For example, the Social, Community, Home Care and Disability Services Industry Award 2010 (the SCHADS Award) covers many not-for-profit workers and has minimum rates above the national minimum.

Importantly, salary packaging does not change these minimums. The Fair Work Ombudsman states that an employee must receive at least the minimum wage in cash (or a combination of cash and genuine benefits that meet the value). In practice, your base salary before any salary sacrifice must be at least the minimum wage. If you salary sacrifice part of your wage, your employer must still pay you the minimum cash amount—the sacrifice cannot reduce your take-home cash below that floor.

How Salary Packaging Works in the Not-for-Profit Sector

Not-for-profit organisations often offer salary packaging because they can access fringe benefits tax (FBT) concessions. For instance, employees of public benevolent institutions can receive up to $15,900 in FBT-exempt benefits per year, plus an additional $2,650 for entertainment. This means you can package items like mortgage payments, rent, or school fees without paying tax on that portion of your income.

However, salary packaging is a separate arrangement from your minimum wage entitlement. Your employer must still pay you the minimum wage in cash (or equivalent) before any packaging. The packaged amount reduces your taxable income, which lowers your PAYG withholding and may reduce your Medicare levy (which is 2% once your annualised ordinary gross income exceeds $30,000). But it does not reduce the gross wage that counts towards minimum wage compliance.

Superannuation on Top

Employers must pay superannuation guarantee on your ordinary time earnings. For most employees, this is 12% of your gross salary before salary sacrifice. So if you earn $50,000 per year and salary sacrifice $10,000, your employer still pays 12% of $50,000 ($6,000) into your super fund. This is an employer payment on top of your cash wage and any packaged benefits.

No Specific Market Rate for Not-for-Profit

The reference on this site does not include a survey average or typical salary for not-for-profit employees. The Australian Bureau of Statistics (ABS) reports that full-time adult ordinary-time earnings were $2,083.70 per week in May 2026, but that figure covers all industries. Not-for-profit salaries can vary widely depending on the role, funding, and location. Therefore, we cannot provide a precise market rate for salary packaging not for profit. The legal floor is the national minimum wage or the applicable award rate, whichever is higher.

Key Points to Remember

• The national minimum wage is $26.44 per hour or $1,004.90 per week from 1 July 2026. This is a cash floor.
• Salary packaging reduces your taxable income but cannot reduce your cash wage below the minimum.
• Super guarantee is 12% on your ordinary time earnings (gross before sacrifice), paid on top.
• Award and enterprise agreement rates may be higher than the national minimum.
• For award-free employees, junior rates apply as per the percentages in the reference.

For more details on which minimum wage applies to you, see Which minimum wage applies. For a full list of rates, visit Rate tables.

Frequently Asked Questions

Does salary packaging reduce my minimum wage entitlement? No. The national minimum wage is a cash floor. Salary packaging (salary sacrifice) can reduce your taxable income, but it cannot reduce the cash wage you receive below the minimum. Your employer must still pay you at least $26.44 per hour or the applicable award rate in cash, before any salary sacrifice arrangement.

How does salary packaging affect my superannuation? Superannuation guarantee is calculated on your ordinary time earnings, which generally includes the gross salary before salary sacrifice. So if you salary sacrifice part of your pay, your employer must still pay the 12% super guarantee on your full ordinary time earnings. This is a separate employer payment on top of your cash wage.

Is salary packaging only available for not-for-profit employees? Not exclusively, but not-for-profit employees often have access to fringe benefits tax (FBT) concessions that make salary packaging more attractive. For example, public benevolent institutions can offer up to $15,900 in FBT-exempt benefits per year. However, salary packaging is also available in other sectors, though the tax treatment may differ.

Disclaimer

This guide provides orientation only. It is not a pay determination, tax advice, or legal advice. Always check your specific award or agreement and consult a qualified professional for your circumstances.

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