Can you salary sacrifice childcare fees? Award coverage and the minimum wage floor

Can you salary sacrifice childcare fees? Award coverage and the minimum wage floor

When you ask can you salary sacrifice childcare fees, you are really asking how a tax-effective arrangement interacts with your pay floor. Salary sacrifice is a voluntary agreement to forgo part of your cash salary in exchange for the employer covering your child care costs. It does not set or change the minimum wage that must be paid to you. The legal floor is set by the Fair Work Commission sets the national minimum wage, and the Fair Work Ombudsman explains and enforces it. The national minimum wage from 1 July 2026 is $26.44 per hour, $1,004.90 per week for an adult employee working 38 ordinary hours. For casual employees, the casual loading brings the rate to $33.05 per hour. These figures are the backstop for award-free and agreement-free employees. A modern award or enterprise agreement can require a higher rate than the national minimum. 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 in the state system, are covered by state awards instead.

Legal minimum versus survey average versus award rate versus negotiated salary

The national minimum is the floor. The ABS May 2026 full-time adult ordinary-time earnings $2,083.70 per week, all employees average total earnings $1,579.20 per week. These are averages, not minimums. Award rates are set by the Fair Work Commission and can be higher than the national minimum. For example, the award backstop ongoing $26.44 per hour or $1,004.90 per week. Introductory rates for the first six months $25.74 per hour or $978.10 per week. Junior rates for award-free employees: under 16 $9.73 per hour, casual $12.16; 16 $12.51, casual $15.64; 17 $15.29, casual $19.11; 18 $18.06, casual $22.58; 19 $21.82, casual $27.28; 20 $25.84, casual $32.30; 21 and over $26.44, casual $33.05. Apprentice and trainee rates for award-free employees follow the Miscellaneous Award, not the junior percentages.

Salary sacrifice and the minimum wage

Salary sacrificing childcare fees does not change the minimum wage obligation. Your cash salary after the sacrifice must still meet the applicable minimum wage. The employer must pay superannuation guarantee of 12% on top of your ordinary time earnings. The super is not deducted from the minimum wage; it is an additional payment. If you are covered by an award, the award rate may be higher than the national minimum, and salary sacrifice cannot reduce your base rate below that award rate. If you are award-free, the national minimum applies. Always check your coverage: Which minimum wage applies or see Rate tables for current figures.

Practical considerations

Salary sacrifice is a tax arrangement, not a wage determination. The ATO sets rules for salary sacrificing childcare fees under a salary sacrifice arrangement. Your employer must agree to the arrangement. The benefit (childcare fees) is not counted as wages for minimum wage purposes, so your cash salary must still be at least the minimum wage. If your cash salary falls below the minimum wage after the sacrifice, the arrangement is invalid under the Fair Work Act. You should also consider how salary sacrifice affects your superannuation, as the sacrificed amount reduces your reportable salary for tax but may still count for super guarantee purposes. Consult a tax professional.

Internal resources

For more on how the figures work, see How the figures work. For an overview of topics related to pay floors, visit Topics.

Summary

Can you salary sacrifice childcare fees? Yes, but it does not change the minimum wage you must receive in cash. The national minimum wage is $26.44 per hour from 1 July 2026. Award rates may be higher. Salary sacrifice is voluntary and must not reduce your base rate below the legal floor. Super is paid on top. Always check your award or agreement for specific rules.