Can you salary sacrifice your mortgage? How it relates to the minimum wage

Can you salary sacrifice your mortgage? Understanding the pay floor

If you are wondering can you salary sacrifice your mortgage, the short answer is yes – but it does not change the minimum wage your employer must pay you. Salary sacrifice is a voluntary agreement to reduce your pre-tax salary in exchange for a benefit, such as mortgage repayments. However, the legal pay floor remains the same. This guide explains how the minimum wage, award rates, and salary sacrifice interact.

The legal minimum wage

From 1 July 2026, the national minimum wage for adult award-free employees is $26.44 per hour or $1,004.90 per week (based on 38 ordinary hours). Casual employees receive a 25% loading, making the casual rate $33.05 per hour. These figures are set by the Fair Work Commission and apply to national-system employees who are not covered by a modern award or enterprise agreement.

Your employer must pay you at least this amount in cash (or a combination of cash and sacrificed salary) before any salary sacrifice arrangement. The super guarantee of 12% is paid on top of your ordinary time earnings, so your total employment cost is higher than the cash wage.

Award coverage and higher rates

Many employees are covered by a modern award, which sets minimum pay rates higher than the national minimum. For example, the lowest ongoing classification in an award cannot be less than $26.44 per hour, but many awards have higher rates. Introductory rates (first six months) are capped at $25.74 per hour or $978.10 per week. If your award applies, your employer must pay the award rate, not the national minimum. Salary sacrifice cannot reduce your base rate below the award minimum.

For award-free employees, the national minimum is the floor. But if you are covered by an enterprise agreement, that agreement may set higher rates. Always check your employment instrument.

How salary sacrifice works with the minimum wage

Salary sacrifice reduces your taxable income, but it does not reduce the amount your employer is required to pay you. The Fair Work Ombudsman explains that salary sacrifice cannot bring your cash pay below the minimum wage. For example, if your minimum wage is $1,004.90 per week, you cannot sacrifice so much that your cash component falls under that figure. The sacrificed amount is still part of your total remuneration, but the cash component must meet the legal floor.

Comparing the minimum wage to average earnings

The ABS May 2026 data shows average weekly earnings for all employees are $1,579.20, and full-time adult ordinary-time earnings are $2,083.70. The national minimum wage is well below these averages. Salary sacrifice is more beneficial for higher earners because it reduces tax at their marginal rate. For minimum wage earners, the tax benefit is smaller, and the arrangement must still comply with the law.

Internal resources

For more details on which pay floor applies to you, see Which minimum wage applies. You can also browse Rate tables for current award and national minimum rates.

Important notes

• The national minimum wage applies to award-free and agreement-free national-system employees. Most private-sector employees are in the national system, but some state public sector and local government employees may be covered by state awards.
• Juniors, apprentices, trainees, and supported wage employees may be paid less than the adult rate. Award-free junior rates are set by age (e.g., under 16: $9.73 per hour).
• Salary sacrifice does not affect the super guarantee, which is calculated on ordinary time earnings before sacrifice.
• This guide is for orientation only. It is not a pay determination or tax advice. Consult the Fair Work Ombudsman or a qualified professional for your situation.

FAQs

(FAQs are listed in the faqs array above.)

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