Salary packaging Perth: how it relates to the minimum wage

Salary packaging Perth and the minimum wage

If you are looking into salary packaging in Perth, you might wonder how it affects the minimum wage you must pay or receive. Salary packaging (also called salary sacrifice) is an arrangement where an employee agrees to forgo part of their cash salary in exchange for benefits such as a car, laptop, or additional super contributions. It is a tax-effective strategy, but it does not change the legal obligation to pay at least the national minimum wage.

Which pay floor applies?

The national minimum wage is set by the Fair Work Commission. From 1 July 2026, the adult rate is $26.44 per hour or $1,004.90 per week for a full-time employee working 38 ordinary hours. Casual employees receive a loading of 25%, making the casual minimum $33.05 per hour. These rates apply to national-system employees who are not covered by a modern award or enterprise agreement. Most private-sector employees in Perth are in the national system.

If a modern award covers the employee, the award rate is the minimum. Awards often have higher rates than the national minimum, especially for classifications with skill or responsibility. An enterprise agreement can also set a higher rate. The national minimum is a backstop: no employee can be paid less, but an award or agreement can require more.

Salary packaging does not reduce these minimums. The employee must still receive at least the minimum wage in cash or a combination of cash and benefits that count as wages for the purpose of the Fair Work Act. The Fair Work Ombudsman advises that salary packaging cannot bring the cash component below the minimum wage. If the packaged amount reduces cash pay below the legal floor, the arrangement is invalid and the employer must top up the cash.

Separating the legal minimum from other figures

It is important to distinguish the legal minimum from survey averages and negotiated salaries. The ABS May 2026 report shows full-time adult ordinary-time earnings of $2,083.70 per week and all employees average total earnings of $1,579.20 per week. These are averages, not minimums. Many Perth workers earn above the minimum, especially in mining, construction, and professional services. Salary packaging is more common in those sectors, but it does not change the floor.

An award rate is a minimum for a specific industry or occupation. For example, the Miscellaneous Award covers award-free employees who are not covered by another award. Apprentice and trainee rates follow that award, not the junior percentages. Junior rates for award-free employees are set by age, from 36.8% for under 16 to 100% at 21 and over. These are lower than the adult minimum, but salary packaging cannot reduce the cash component below the applicable junior rate.

Super guarantee is on top

When discussing pay, remember that superannuation guarantee is an employer payment on top of ordinary time earnings. From 1 July 2026, the super guarantee rate is 12%. This is not deducted from the employee's pay; it is an additional cost to the employer. Salary packaging can affect the super guarantee base if the packaged amount is not part of ordinary time earnings, but generally salary sacrifice amounts are included. The ATO provides guidance on what counts as ordinary time earnings.

What salary packaging does not change

Salary packaging is a tax arrangement under the Fringe Benefits Tax Assessment Act. It does not alter the minimum wage obligation, the award rate, or the enterprise agreement rate. It does not change the requirement to pay super guarantee on ordinary time earnings. It does not affect the calculation of leave entitlements, penalty rates, or allowances unless the award or agreement specifically allows it.

If you are an employer in Perth considering salary packaging, ensure the cash component after packaging meets the minimum wage. If you are an employee, understand that salary packaging reduces your taxable income but not your minimum wage entitlement. For more details on which minimum wage applies, see Which minimum wage applies. For guides on awards and agreements, see Guides.

Common misunderstandings

Some people think salary packaging allows them to pay below the minimum wage. This is incorrect. The Fair Work Ombudsman enforces the minimum wage, and salary packaging does not override it. Others think salary packaging is only available in Perth or only for not-for-profit employers. While Perth has many not-for-profit and public sector employers that offer salary packaging, it is available nationally and in the private sector too.

Another misunderstanding is that salary packaging reduces the employer's super obligation. In most cases, salary sacrifice amounts are still subject to super guarantee. The ATO has clear rules on this.

Summary

The national minimum wage from 1 July 2026 is $26.44 per hour or $1,004.90 per week. Super guarantee of 12% is paid on top. Salary packaging in Perth does not reduce these amounts. Always check the applicable award or agreement, as they can set higher rates. For more information, see How the figures work and Topics.