What is salary packaging and how does it affect my minimum wage?

Salary packaging (or salary sacrifice) is an arrangement where you agree to forgo part of your salary in exchange for benefits such as a car, additional super, or electronic devices. It does not reduce the minimum wage your employer must pay you. The Fair Work Ombudsman states that the cash component of your pay after packaging cannot fall below the relevant minimum wage or award rate. For example, if the national minimum wage is $26.44 per hour, your employer must pay at least that amount in cash, even if you also receive packaged benefits.

Does salary packaging reduce my super guarantee?

No. The super guarantee is calculated on your ordinary time earnings, which is your salary before any salary sacrifice arrangement. Even if you package part of your salary, your employer must still pay 12% super on your full ordinary time earnings. The Australian Taxation Office (ATO) confirms that salary sacrifice contributions cannot reduce the super guarantee obligation. So using Southgate Salary Packaging does not lower the super your employer must contribute.

Can my employer pay me below the minimum wage if I use Southgate Salary Packaging?

No. Salary packaging cannot be used to justify paying below the minimum wage. The Fair Work Commission sets the national minimum wage, and the Fair Work Ombudsman enforces it. Your employer must ensure that the cash component of your pay, after any packaging deductions, is at least the applicable minimum wage or award rate. If you are covered by a modern award or enterprise agreement, that document may require a higher rate. Always check your pay slip to confirm you receive at least the legal minimum in cash.

Southgate Salary Packaging and the Minimum Wage: How Your Pay Floor Works

The national minimum wage from 1 July 2026 is $26.44 per hour, but salary packaging does not reduce this obligation; the precise market rate for Southgate Salary Packaging employees is not in the reference.

Southgate Salary Packaging and the minimum wage

If you use Southgate Salary Packaging, you may be wondering how salary sacrifice affects your pay floor. Salary packaging is a common way to reduce taxable income by swapping part of your salary for benefits such as a car, extra super, or electronic devices. However, it does not change the legal minimum your employer must pay you in cash. This guide explains how the national minimum wage, award rates, and super guarantee interact with salary packaging.

The legal minimum wage

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 loading of 25%, making the casual rate $33.05 per hour. These rates apply to national-system employees who are award-free and agreement-free. Most private-sector employees are in the national system. Some state public sector and local government employees, and some Western Australian sole traders and partnerships, are covered by state awards instead.

If you are covered by a modern award, the award may set a higher minimum wage. The award backstop from 1 July 2026 is $26.44 per hour for ongoing employees, with an introductory rate of $25.74 per hour for the first six months. A modern award or enterprise agreement can require a rate higher than the national minimum. Always check your award or agreement.

How salary packaging fits in

Salary packaging does not reduce the minimum wage obligation. The Fair Work Ombudsman explains that the cash component of your pay after packaging must be at least the applicable minimum wage or award rate. For example, if you earn $30 per hour and package $5 per hour for a car, your employer must still pay you at least $25 per hour in cash? No, that would be below the minimum. The cash component must be at least $26.44 per hour (or the award rate). So your employer cannot use packaging to drop your cash pay below the legal floor.

Super guarantee on top

Super is an employer payment on top of your ordinary time earnings. From 1 July 2026, the super guarantee rate is 12%. This is calculated on your ordinary time earnings, which is your salary before any salary sacrifice arrangement. Even if you package part of your salary, your employer must pay 12% super on your full ordinary time earnings. The ATO confirms that salary sacrifice contributions cannot reduce the super guarantee obligation. So using Southgate Salary Packaging does not lower the super your employer must contribute.

Award-free juniors and other rates

If you are under 21 and award-free, your minimum wage is a percentage of the adult rate. For example, a 17-year-old award-free employee must receive at least $15.29 per hour (57.8% of $26.44). Juniors, apprentices, trainees, and supported wage employees can be paid less than the adult minimum. Salary packaging does not change these percentages. The cash component must still meet the junior or trainee rate.

Comparing with survey averages

The Australian Bureau of Statistics (ABS) reports average earnings. In May 2026, full-time adult ordinary-time earnings were $2,083.70 per week, and all employees average total earnings were $1,579.20 per week. These are survey averages, not legal minimums. Your salary packaging arrangement may affect your taxable income, but it does not change the legal floor. If you are paid above the minimum, your packaging is negotiated between you and your employer.

More information

For more details on which minimum wage applies to you, see Which minimum wage applies. For rate tables covering awards and juniors, see Rate tables. Our Guides section has further explanations on salary packaging and pay. Remember, this site provides orientation only and is not a pay determination or legal advice. Always consult the Fair Work Ombudsman or a qualified professional for your specific situation.