Does salary packaging for teachers reduce the minimum wage I must be paid?

No. Salary packaging (also called salary sacrifice) is an arrangement where you agree to forgo part of your cash salary in exchange for benefits such as a car, laptop, or additional super contributions. The legal minimum wage – whether the national minimum wage or a higher award rate – applies to your gross ordinary-time earnings before any salary sacrifice. Your employer must still pay you at least the minimum cash amount required by law, even if you salary package. The packaged amount reduces your taxable income but does not lower the pay floor.

Are teachers covered by a modern award that sets a higher minimum than the national minimum wage?

Yes, most teachers in Australia are covered by the Teachers Award (or a state equivalent) or an enterprise agreement. The Fair Work Commission sets modern award rates, which from 1 July 2026 rise by 4.75%, but the lowest ongoing classification cannot fall below the national minimum wage of $26.44 per hour. Award rates for teachers are typically higher than the national minimum, and salary packaging must not bring your cash pay below the award rate. Check your specific award classification or agreement for the exact rate.

Salary Packaging for Teachers: How It Interacts with the Minimum Wage Floor

Q: How does superannuation work with salary packaging for teachers?

The super guarantee requires your employer to contribute 12% of your ordinary-time earnings (as of 1 July 2026) on top of your base salary. Salary packaging does not reduce the super guarantee base; it is calculated on your gross ordinary-time earnings before any salary sacrifice. If you salary package additional super contributions, those are separate and come from your pre-tax salary, but the employer's mandatory 12% remains payable on your full ordinary-time earnings. Always check your award or agreement, as some allow salary packaging only within limits.

The legal minimum for award-free teachers is the national minimum wage of $26.44 per hour from 1 July 2026, but most teachers are covered by an award or agreement that sets a higher rate.

Salary Packaging for Teachers and the Minimum Wage

Salary packaging for teachers is a common way to reduce taxable income by swapping part of your salary for benefits such as a car, laptop, or additional super contributions. While this can be financially advantageous, it is essential to understand how it interacts with Australia's minimum wage laws. This guide explains the legal pay floor, how salary packaging affects your entitlements, and where to find authoritative rates.

The Legal Minimum Wage Floor

For teachers who are award-free and not covered by an enterprise agreement, the national minimum wage applies. 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 (based on a 38-hour ordinary week). Casual employees receive a loading of 25%, making the casual rate $33.05 per hour. These figures are set by the Fair Work Commission and enforced by the Fair Work Ombudsman.

Salary packaging does not reduce this floor. Your employer must pay you at least the minimum cash wage for each hour worked, regardless of any salary sacrifice arrangement. If you salary package, the benefit is deducted from your gross salary after the minimum wage obligation is met. For example, if your award rate is $40 per hour, you can salary package up to the difference between that rate and the minimum, but your cash pay cannot fall below $26.44 per hour (or the applicable award rate if higher).

Award Rates for Teachers

Most teachers in Australia are covered by the Teachers Award (or a state-based award) or an enterprise agreement. The Fair Work Commission sets modern award rates that are generally higher than the national minimum. From 1 July 2026, modern award minimum wages rise by 4.75%, but the lowest ongoing classification cannot sit under the national minimum. Introductory rates (first six months) are limited to $25.74 per hour or $978.10 per week. Award rates vary by classification, experience, and state. To find the exact rate for your role, refer to the relevant award or agreement. Salary packaging must not bring your cash pay below the award rate.

Survey Averages and Negotiated Salaries

The Australian Bureau of Statistics (ABS) publishes average earnings data. As of May 2026, full-time adult ordinary-time earnings were $2,083.70 per week, and all employees average total earnings were $1,579.20 per week. These figures include salary packaging arrangements and are higher than the minimum wage. However, they are averages and do not represent a legal floor. Your negotiated salary may be above the award rate, and salary packaging can be part of that negotiation. Always ensure your base cash salary meets the minimum legal requirement.

Superannuation on Top

Employers must pay the super guarantee of 12% on your ordinary-time earnings (from 1 July 2026) on top of your base salary. This is calculated on your gross ordinary-time earnings before any salary sacrifice. If you salary package additional super contributions, those are separate and come from your pre-tax salary. The mandatory 12% remains payable on your full ordinary-time earnings. For example, if your base salary is $50,000, the employer pays $6,000 in super regardless of any salary packaging.

Key Points to Remember

Salary packaging does not reduce the minimum wage you must receive in cash.
The national minimum wage is $26.44 per hour from 1 July 2026, but most teachers are covered by a higher award or agreement.
Super is paid on top of your ordinary-time earnings, not reduced by salary packaging.
For award-free juniors, lower percentages apply (see rate tables).
Always check your award or agreement for specific rates and packaging limits.

For more details on how minimum wages are calculated, see our guides and methodology page.

FAQs

(Three FAQs are provided in the faqs array above.)