Not for profit salary sacrifice and the minimum wage: what you need to know

Not for profit salary sacrifice and the minimum wage

If you work for a not-for-profit (NFP) organisation, you may have access to salary sacrifice arrangements that allow you to reduce your taxable income by directing part of your pre-tax salary towards benefits such as superannuation, a car, or other fringe benefits. However, it is important to understand how these arrangements interact with Australia’s minimum wage laws. The legal pay floor – the national minimum wage – still applies to your gross salary before any salary sacrifice is made. This article explains the key distinctions between the legal minimum, award rates, and negotiated salaries, and how salary sacrifice fits in.

The legal minimum wage

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. This is the minimum that must be paid to an award‑free employee who is 21 or over. For casual employees, a loading of 25% applies, giving a casual rate of $33.05 per hour. Importantly, salary sacrifice does not reduce the gross wage that must be paid to meet this minimum. Your employer must still pay you at least the national minimum wage in gross terms before any salary sacrifice deductions are made.

Award coverage and higher rates

Many NFP employees are covered by a modern award, such as the Social, Community, Home Care and Disability Services Industry Award (SCHADS Award). If an award applies, the award rate is the minimum – and it is often higher than the national minimum. For example, award classifications may set rates above $26.44 per hour. An enterprise agreement can also set higher rates. The national minimum is a backstop; it only applies if no award or agreement covers the employee. To check your award, see our Which minimum wage applies guide.

Survey averages vs the minimum

The Australian Bureau of Statistics (ABS) reports average earnings. In May 2026, full‑time adult ordinary‑time earnings averaged $2,083.70 per week, while all employees averaged $1,579.20 per week. These figures are much higher than the national minimum, reflecting that many workers earn above the floor. Salary sacrifice can affect take‑home pay, but it does not change these averages. The minimum wage is a floor, not a target.

Negotiated salaries and salary sacrifice

If you are award‑free and not covered by an agreement, your employer can negotiate a salary above the national minimum. Salary sacrifice is a separate arrangement that you agree to with your employer. It can reduce your taxable income, but the gross salary must still meet the minimum wage. For example, if your gross salary is $55,000 per year and you salary sacrifice $10,000 into super, your gross wage for minimum wage purposes is still $55,000 – well above the floor. The ATO sets caps on how much you can salary sacrifice in an NFP, but these caps do not affect the minimum wage obligation.

Superannuation

Employers must pay superannuation guarantee contributions of 12% on top of ordinary time earnings. This is calculated on your gross salary before salary sacrifice (except for salary‑sacrificed super contributions, which are still part of ordinary time earnings). So salary sacrifice does not reduce the super your employer must pay, provided the sacrifice is to super or another benefit that counts as ordinary time earnings. The minimum wage figures quoted here are before super; the employer pays super on top.

Junior and other rates

If you are under 21 and award‑free, the junior percentage rates apply. For example, a 17‑year‑old receives 57.8% of the adult rate, or $15.29 per hour. Salary sacrifice does not change these percentages. Apprentices and trainees have their own rates under the Miscellaneous Award. Always check your award or agreement first.

For more details on how rates are calculated, see our Rate tables and How the figures work pages.