NSW Health Salary Sacrifice: How It Affects Your Weekly Packet

Understanding NSW Health Salary Sacrifice

Salary sacrifice is an arrangement where you agree to forgo part of your pre‑tax salary in exchange for benefits such as additional superannuation contributions. For NSW Health employees, this is governed by the Health Professional Salaries (State) Award 2025 and the Health Employees Conditions of Employment (State) Award 2025. These awards allow you to sacrifice up to 100% of your salary, subject to employer agreement, and also permit salary packaging for a range of benefits.

The Legal Minimum vs. Award Rates

NSW Health employees are covered by state awards, not the national system. The national minimum wage (currently $26.44 per hour from 1 July 2026) applies only to award‑free employees in the national system. Under the NSW Health awards, minimum salaries are set at higher levels. For example, the Health Professional Salaries Award provides annual increases of 4% from 1 July 2025 and again from 1 July 2026. These award rates are your legal minimum; you cannot be paid less. Salary sacrifice does not reduce your award rate – it only changes how your salary is allocated between cash and benefits.

How Salary Sacrifice Affects Your Weekly Packet

When you salary sacrifice, your taxable income decreases, so you pay less income tax and Medicare levy. However, the award states that certain entitlements – such as penalty rates, overtime, and leave payments – are calculated using the salary you would have received without the sacrifice. This protects your take‑home pay from those extras. The super guarantee (12% on top of ordinary time earnings) is also based on your reduced salary, but the sacrificed amount counts toward meeting that obligation.

The $17,000 FBT Exemption Cap

NSW Health’s salary packaging scheme uses a fringe benefit tax (FBT) exemption cap of $17,000 per year. Benefits up to this cap (when grossed‑up) are FBT‑free. If the grossed‑up value exceeds $17,000, the employer pays FBT on the excess but will generally pass that cost to you. This means you need to plan your packaging to stay within the cap to maximise tax savings.

Super on Top

Remember that super is an employer payment on top of your salary. If you salary sacrifice into super, those contributions are in addition to the compulsory super guarantee. The award allows you to direct sacrificed amounts to a complying super fund, including First State Super or a private fund. This can boost your retirement savings while reducing your current tax bill.

Comparing Your Situation

To see how your current pay compares with the national minimum or award rates, visit our Rate tables page. For a detailed explanation of how we calculate figures, see How the figures work.

Important Notes

• The national minimum wage ($26.44/h) is a floor for award‑free employees. NSW Health award rates are higher.
• Junior, apprentice, and supported wage rates may be lower than the adult rate.
• Salary sacrifice is voluntary and requires a written agreement with your employer.
• This information is for guidance only and does not constitute tax or legal advice. Consult a qualified professional for your specific circumstances.