Salary Sacrifice EV and the Australian Minimum Wage: What You Need to Know

Understanding salary sacrifice for an electric vehicle (EV) and minimum wage obligations

Salary sacrifice for an electric vehicle (EV) is a popular way to reduce your taxable income while gaining access to a new car and running costs. Under a salary packaging arrangement, you agree to forego part of your pre-tax salary in exchange for the employer providing the EV and associated expenses (such as registration, insurance, and charging). This can lower your income tax bill, but it also raises important questions about how the arrangement interacts with Australia’s minimum wage laws.

This guide explains the legal pay floor that applies to you, how salary sacrifice affects that floor, and what you need to know about award rates, superannuation, and casual or junior rates. We rely on the figures published by the Fair Work Commission and the Fair Work Ombudsman, as well as the Australian Bureau of Statistics (ABS) for average earnings context. The reference on this site does not include a specific market rate for salary sacrifice EV arrangements, so we focus on the legal minimums.

How the national minimum wage interacts with salary sacrifice

The national minimum wage is set by the Fair Work Commission and applies to award-free employees who are not covered by an enterprise agreement. From 1 July 2026, the adult rate is $26.44 per hour or $1,004.90 per week for a 38-hour ordinary week. Casual employees receive a 25% loading, making the casual rate $33.05 per hour.

Crucially, salary sacrifice cannot reduce your base rate of pay below the minimum wage. The Fair Work Act requires that your base rate—the amount before any sacrifice—must be at least the applicable minimum. So if you earn $1,200 per week before sacrifice and agree to sacrifice $200 for an EV, your base rate remains $1,200 (above the $1,004.90 floor). The sacrificed amount is simply redirected to the benefit. If your base rate were exactly $1,004.90, you could not sacrifice any amount because that would push your base below the legal minimum.

For a full breakdown of which pay floor applies to you, see our Which minimum wage applies guide.

Award rates and salary sacrifice

If you are covered by a modern award, your minimum wage is set by that award, not the national minimum. However, the award rate cannot be lower than the national minimum. From the first full pay period on or after 1 July 2026, modern award minimum wages rise by 4.75%, but the lowest ongoing classification cannot sit under $26.44 per hour. Introductory rates (first 6 months) are capped at $25.74 per hour or $978.10 per week.

Salary sacrifice arrangements are common under awards that allow salary packaging, but the same rule applies: your base rate of pay must meet the award minimum. The award may also specify that salary sacrifice cannot reduce the base rate below the award rate. Always check your award or enterprise agreement for specific provisions.

You can compare current rates in our Rate tables.

The role of superannuation

Superannuation guarantee contributions are calculated on your ordinary time earnings (OTE). OTE is your salary before any salary sacrifice. So if you sacrifice part of your salary for an EV, your employer must still pay 12% super on the full pre-sacrifice amount. For example, if your base salary is $60,000 per year, your employer contributes $7,200 in super regardless of a $10,000 salary sacrifice. This is a key benefit of salary packaging: you reduce your taxable income without reducing your super.

Casual loading and junior rates

Casual employees receive a 25% loading on the minimum wage. For salary sacrifice, the loading is part of your base rate. So a casual adult employee on the national minimum earns $33.05 per hour before sacrifice. The same rule applies: the base rate (including loading) must stay above the minimum after sacrifice.

Junior rates apply to award-free employees under 21. For example, a 17-year-old earns $15.29 per hour (57.8% of the adult rate) or $19.11 casual. Salary sacrifice is less common for juniors, but if offered, the base rate must still meet the junior minimum. The percentages are set by the Fair Work Ombudsman and cannot be undercut by a salary packaging agreement.

What the reference does not cover

This site’s reference provides the national minimum wage, award backstop rates, junior percentages, and average earnings from the ABS (full-time adult ordinary-time earnings of $2,083.70 per week as of May 2026). It does not include a specific market rate for salary sacrifice EV arrangements, nor does it provide median or employer-specific figures. For precise details on your salary packaging offer, consult your employer or a qualified tax professional. This guide is for orientation only and is not a pay determination or tax advice.

For more on how we compile our figures, see How the figures work.