Salary Packaging Plus and the Australian Minimum Wage: What You Need to Know

Salary Packaging Plus and the Minimum Wage Floor

Salary packaging plus is a term often used to describe a remuneration arrangement where an employee can sacrifice part of their pre-tax salary in exchange for benefits such as a car, laptop, additional super contributions, or other fringe benefits. While salary packaging can reduce your taxable income and increase your take-home pay for certain expenses, it does not change the fundamental pay floor that applies to you. This article explains how salary packaging plus interacts with the national minimum wage, award rates, super guarantee, and tax, using the latest figures from the Fair Work Commission and the Australian Bureau of Statistics.

The Legal Minimum: National Minimum Wage and Award Rates

The Fair Work Commission sets the national minimum wage. From 1 July 2026, the adult national minimum wage is $26.44 per hour or $1,004.90 per week for a 38-hour week. Casual employees receive a loading of 25%, giving a casual minimum of $33.05 per hour. These rates apply to national-system employees who are not covered by a modern award or enterprise agreement. If you are covered by a modern award, the award minimum wage for your classification applies, and it cannot be lower than the national minimum. For example, the lowest ongoing award classification from 1 July 2026 is also $26.44 per hour, with an introductory rate of $25.74 per hour for the first six months. Junior employees, apprentices, and trainees may be paid lower percentages or special rates. See our Rate tables for detailed award and junior rates.

Salary packaging plus does not allow your employer to pay you less than these minimums. The gross ordinary time earnings before any salary sacrifice must meet or exceed the applicable minimum. If you salary sacrifice a portion of your wage, your employer must still pay you at least the minimum hourly or weekly rate in cash or benefits combined, but the cash component cannot fall below zero. The Fair Work Ombudsman enforces these rules.

Super Guarantee: Paid on Top

Employers must pay super guarantee contributions of 12% on your ordinary time earnings. This is calculated on the salary or wage you would have earned without salary sacrifice. For example, if your ordinary time earnings are $1,004.90 per week, your employer must contribute $120.59 to your super fund (12% of $1,004.90). Salary packaging plus that includes additional super contributions (above the 12%) is a common benefit, but the mandatory super is always based on your pre-sacrifice earnings. This ensures your retirement savings are not reduced by salary packaging.

Tax and Take-Home Pay

Salary packaging plus can reduce your taxable income, potentially lowering the amount of tax you pay. For the 2026-27 tax year, resident rates with the full tax-free threshold apply. Medicare levy is estimated at 2% once annualised ordinary gross income reaches $30,000. The low-income tax offset and other offsets are not included in this model. Salary sacrifice arrangements such as packaging a car or laptop can be tax-effective, but they do not affect the minimum wage floor. Your employer must still report your gross ordinary time earnings to the ATO, and your super is based on that amount.

Award and Enterprise Agreement Rates

If you are covered by a modern award or enterprise agreement, your minimum pay may be higher than the national minimum. For example, many awards have classification rates above $26.44 per hour. Salary packaging plus is a matter of negotiation between you and your employer, but it cannot undercut the award rate. Enterprise agreements often include specific provisions about salary packaging. Always check your award or agreement before entering into a salary packaging arrangement. For more information, see Which minimum wage applies to determine your coverage.

Survey Averages and Negotiated Salaries

The Australian Bureau of Statistics (ABS) reports that in May 2026, full-time adult ordinary-time earnings averaged $2,083.70 per week, while all employees (including part-time) averaged $1,579.20 per week. These are survey averages, not legal minimums. Many employees earn above the minimum through negotiation, skills, or industry demand. Salary packaging plus can be part of a negotiated total remuneration package, but the base salary must still meet the legal floor. The ABS figures are useful for benchmarking but do not set a pay standard.

Key Points to Remember

• The national minimum wage is $26.44 per hour or $1,004.90 per week (adult, award-free).
• Super guarantee of 12% is paid on top of ordinary time earnings.
• Salary packaging plus cannot reduce your gross pay below the minimum wage or award rate.
• Award and enterprise agreement rates may be higher.
• Junior, apprentice, and trainee rates are lower but still subject to legal minima.
• For personalised advice, consult a tax professional or your employer's HR department.

For further reading, see our How the figures work page to understand how we calculate rates, and Topics for more on salary packaging and pay conditions.