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

NFP salary packaging is a tax concession that allows employees of not-for-profit organisations to pay for certain expenses with pre-tax income, reducing their taxable income and increasing net pay. It does not affect your minimum wage entitlement because the legal minimum is based on your gross pay before any salary packaging deductions. Your employer must still pay you at least the relevant minimum wage in gross terms.

Does salary packaging reduce the minimum wage my employer must pay me?

No. Salary packaging is an arrangement between you and your employer, but it cannot reduce your gross pay below the legal minimum. The Fair Work Ombudsman states that salary packaging does not change the minimum wage obligation. Your gross hourly rate must still meet the national minimum wage or the applicable award rate.

How can I check if my hourly rate meets the minimum wage after salary packaging?

To check, compare your gross hourly rate (before tax and before any salary packaging deductions) to the relevant minimum. For adults not covered by an award, the minimum is $26.44 per hour from 1 July 2026. If your gross rate is at or above that figure, you are compliant. Salary packaging may increase your net effective hourly rate, but it does not change the gross minimum requirement.

NFP Salary Packaging and the Minimum Wage: A Practical Check for Your Hourly Rate

The adult national minimum wage from 1 July 2026 is $26.44 per hour, or $1,004.90 per week for a 38-hour week, with superannuation of 12% on top. NFP salary packaging does not change this legal minimum but can increase your net effective hourly rate through tax concessions.

NFP salary packaging and your minimum wage check

If you work in the not-for-profit (NFP) sector, you may be eligible for salary packaging – a tax concession that lets you pay for certain expenses with pre-tax income. This can boost your take-home pay, but it does not change the legal minimum wage your employer must pay you. This guide helps you do a practical check: compare your gross hourly rate to the national minimum wage, and understand how NFP salary packaging fits in.

The legal minimum wage floor

From the first full pay period on or after 1 July 2026, the adult national minimum wage is $26.44 per hour, or $1,004.90 per week for a 38-hour week. For casual employees, the minimum is $33.05 per hour (including the 25% casual loading). These rates are set by the Fair Work Commission and enforced by the Fair Work Ombudsman. Superannuation of 12% is paid on top of ordinary time earnings by your employer.

If you are covered by a modern award, the award may set a higher minimum. For example, the lowest ongoing classification in an award cannot be less than $26.44 per hour, but introductory rates (first six months) can be as low as $25.74 per hour. Award-free juniors have lower percentages. Always check your award or enterprise agreement – it can require a higher rate than the national minimum.

Separating the legal minimum from other figures

The legal minimum is not the same as the average wage. According to the Australian Bureau of Statistics (ABS) for May 2026, full-time adult ordinary-time earnings averaged $2,083.70 per week, and all employees averaged $1,579.20 per week. These are survey averages, not a pay floor. Your negotiated salary may be higher than the minimum, but it cannot be lower unless you are a junior, apprentice, or on an introductory award rate.

How NFP salary packaging interacts with the minimum wage

NFP salary packaging is a tax arrangement, not a wage determination. It allows you to salary sacrifice part of your gross pay for items like mortgage payments, rent, or living expenses, reducing your taxable income. This can increase your net (after-tax) pay. However, the minimum wage obligation is based on your gross pay before any salary packaging deductions. Your employer must still pay you at least the legal minimum in gross terms. Salary packaging cannot be used to reduce your gross pay below the minimum.

For example, if your gross hourly rate is $30.00, you are above the minimum of $26.44. After salary packaging, your taxable income may be lower, but your gross rate remains $30.00. The Fair Work Ombudsman confirms that salary packaging does not affect the minimum wage entitlement.

A practical check for your hourly rate

To check if your pay meets the legal floor:

Find your gross hourly rate (before tax and before any salary packaging deductions).
Compare it to the adult national minimum of $26.44 (or your award rate if higher).
If you are a junior, use the appropriate percentage from the award-free junior rates (e.g., 18-year-old: $18.06 per hour).
Remember that super is paid on top – 12% of your ordinary time earnings.

If your gross rate is at or above the relevant minimum, you are compliant. NFP salary packaging does not change this comparison. For more details on which minimum applies to you, see our guide: Which minimum wage applies. For rate tables including award rates, see Rate tables.

What about enterprise agreements?

Some NFP employers have enterprise agreements that set higher rates than the award or national minimum. An agreement cannot undercut the minimum. If you are covered by an agreement, your gross rate must meet the agreement's terms. Salary packaging is a separate matter.

Conclusion

NFP salary packaging is a valuable benefit that can increase your net pay, but it does not alter the legal minimum wage. Always check your gross hourly rate against the relevant floor. For more information, see our Guides or How the figures work.