What is aged care salary packaging?

Aged care salary packaging is a tax-effective arrangement offered by many non-profit aged care employers. It allows employees to pay for certain expenses (e.g., mortgage, rent, car) from pre-tax income, reducing their taxable income. The underlying wage must still meet the national minimum wage or applicable award rate.

Does salary packaging affect the minimum wage I must be paid?

No. Salary packaging does not reduce the minimum wage your employer must pay you. The legal floor—whether the national minimum wage ($26.44/h from 1 July 2026) or a higher award rate—applies to your gross ordinary-time earnings before any packaging. Packaging only changes how tax is calculated, not the base pay.

How does superannuation apply to salary packaged amounts?

Superannuation guarantee contributions (12% from 1 July 2026) are calculated on your ordinary-time earnings, including amounts you salary package. The employer must pay super on the gross wage before packaging deductions, not on the reduced taxable amount. Salary packaging does not lower the super obligation.

Aged Care Salary Packaging: How It Affects Your Pay and Minimum Wage Compliance

The legal minimum for award-free adult employees is $26.44 per hour or $1,004.90 per week from 1 July 2026, but the Aged Care Award and enterprise agreements often set higher rates; salary packaging can reduce taxable income but does not lower the minimum wage obligation.

Aged care salary packaging and the minimum wage floor

Aged care salary packaging is a popular way for workers in the sector to reduce their tax bill, but it does not change the fundamental pay floor that applies. Whether you are covered by the Aged Care Award, an enterprise agreement, or are award-free, your employer must pay at least the legal minimum for each hour worked. This guide explains how salary packaging interacts with the national minimum wage, award rates, and superannuation.

The legal minimum: national minimum wage and award backstop

The Fair Work Commission sets the national minimum wage. From 1 July 2026, the adult rate is $26.44 per hour or $1,004.90 per week for a 38‑hour week. Casual employees receive a loading of 25%, giving a casual hourly rate of $33.05. These figures apply to national‑system employees who are not covered by a modern award or enterprise agreement.

However, most aged care workers are covered by the Aged Care Award or a registered agreement. Modern award minimum wages also rose by 4.75% from the first full pay period on or after 1 July 2026. The lowest ongoing classification in an award cannot fall below the national minimum. An introductory rate (first six months) is capped at $25.74 per hour or $978.10 per week. If your award or agreement sets a higher rate, that rate is the legal floor for you.

Which minimum wage applies explains how to check your coverage.

Salary packaging does not lower the minimum wage

Salary packaging is a voluntary arrangement where you agree to sacrifice part of your pre‑tax salary to pay for benefits such as rent, mortgage, or car expenses. It reduces your taxable income, but it does not reduce the gross wage your employer must pay. The minimum wage or award rate is calculated on your ordinary‑time earnings before any packaging deduction. Your employer cannot use packaging to pay you less than the legal floor.

For example, if your award rate is $28.00 per hour, your gross pay must be at least $28.00 per hour even if you package $5.00 of that into a benefit. The packaging simply redirects part of your pay, it does not shrink the base rate.

How superannuation works with salary packaging

Superannuation guarantee contributions are paid by your employer on top of your ordinary‑time earnings. From 1 July 2026 the rate is 12%. The super contribution is calculated on your gross wage including any amount you salary package. So if your gross ordinary‑time earnings are $1,000 per week, the employer must pay $120 into your super fund, regardless of how much you package. Salary packaging does not reduce the super obligation.

Survey averages and negotiated salaries

The Australian Bureau of Statistics (ABS) reports that in May 2026, full‑time adult ordinary‑time earnings averaged $2,083.70 per week, and all employees (including part‑time and casual) averaged $1,579.20 per week. These are broad economy‑wide figures, not specific to aged care. Many aged care workers earn less than these averages, especially those in lower award classifications. Salary packaging can make a meaningful difference to take‑home pay, but it does not close the gap to the average if your base wage is below it.

Negotiated salaries above the award are possible, especially for senior roles or in enterprise agreements. However, the award rate remains the minimum unless a higher agreement applies. Rate tables show current award and national minimum figures.

Important distinctions

Legal minimum: Set by the Fair Work Commission and enforced by the Fair Work Ombudsman. Applies to all employees unless a higher award or agreement rate applies.
Award rate: The minimum for a specific classification under a modern award (e.g., Aged Care Award). Can be higher than the national minimum.
Survey average: A statistical measure from the ABS; not a legal requirement. Many workers earn below the average.
Negotiated salary: Agreed between employer and employee, but cannot be less than the award or national minimum.

Who is not covered by the adult minimum?

Not every worker must receive $26.44 per hour. Juniors, apprentices, trainees, and employees on introductory award rates may be paid less. For award‑free juniors, the percentages range from 36.8% (under 16) to 97.7% (age 20). Apprentice and trainee rates for award‑free employees follow the Miscellaneous Award. Always check your specific coverage.

How the figures work explains the rounding and calculation details.

Summary

Aged care salary packaging is a valuable tax‑saving tool, but it does not alter the minimum wage your employer must pay. The legal floor is the national minimum wage or a higher award/agreement rate, and super is paid on your full ordinary‑time earnings. If you are unsure about your pay, consult the Fair Work Ombudsman or your union.