What is the difference between a wage and a salary? A guide to where your pay sits on the Australian salary index
Understand the difference between a wage and a salary in Australia, and see how each type of pay compares to the national salary index of 100.
A wage is typically paid by the hour and sits below the national index line, while a salary is an annualised amount that often lands closer to or above the index of 100.
What is the difference between a wage and a salary?
In Australia, the terms "wage" and "salary" are often used interchangeably, but they mean different things for how you get paid and how your pay compares to the national average. The difference between a wage and a salary comes down to how the pay is calculated and what it covers. A wage is typically an hourly rate, so your pay changes with the hours you work. A salary is a fixed annual amount, paid in equal instalments, regardless of how many hours you work each week.
How the Fair Work Ombudsman explains it
The Fair Work Ombudsman says an annualised wage is a fixed regular amount paid over a year under some awards. It can cover minimum pay, penalties, overtime, allowances, and annual leave loading. But a salary under an employment contract is different – it may offset those same entitlements through a contractual arrangement. The key is that an annualised wage follows award rules, while a salary is agreed between employer and employee, as long as it meets the National Minimum Wage or award minimums.
Where wages and salaries sit on the salary index
The Salary Index uses a simple benchmark: the national line is 100, based on full-time adult ordinary-time earnings of $2,083.70 per week (annualised $108,352) from the Australian Bureau of Statistics. A wage like the national minimum wage of $26.44 per hour gives an annualised figure of $52,255, which is index 48.2 – well below the line. A salary of $80,000 would be index 73.8, while a salary of $130,000 would be index 120. This shows that most wages (hourly rates) fall below the index, while many salaries sit at or above it.
Examples from the on-site reference
- National minimum wage: $26.44/hr, $1,004.90/week, annualised $52,255, index 48.2.
- Entry-level award floor: $25.74/hr, index about 47.5.
- Casual loading: $33.05/hr (including 25% loading), index about 61.
- Full-time adult ordinary-time earnings: $2,083.70/week, index 100.
- Men's average: $2,181/week, index 104.7.
- Women's average: $1,934.50/week, index 92.8.
These figures come from the ABS Average Weekly Earnings survey and the Fair Work Commission's annual wage review. The index makes it easy to see where a wage or salary sits compared to the typical full-time worker.
How awards and contracts affect the difference
If you are covered by a modern award, your minimum pay is usually an hourly wage. For example, the Retail Trade industry has an index of 75.9, meaning the average full-time worker in retail earns about 76% of the national line. That is often a wage-based pay structure. In contrast, the Professional, Scientific and Technical Services industry has an index of 114.7, where salaries are more common.
Some awards allow annualised wage arrangements. Under these, you get a fixed amount each pay period that covers your base rate plus penalties, overtime, and allowances. The Fair Work Ombudsman says the employer must review the arrangement every 12 months to ensure you were paid at least what you would have earned under the award. If not, they must pay the difference.
A salary under a contract can also offset entitlements. For example, your contract might say your salary of $90,000 includes payment for reasonable overtime and annual leave loading. This is legal as long as the salary is enough to cover the award minimums. The pay guides on this site can help you check award rates.
State and industry differences
Where you live and work also affects whether you are on a wage or salary. The states page shows that the ACT has the highest index at 109.9, while Tasmania is at 88.6. In high-index states like Western Australia (106.9), salaries are more common in mining and resources. In lower-index states like South Australia (94.6), more workers are on award wages.
Industries also vary. Mining has an index of 154.7 – mostly salaries. Accommodation and Food Services has an index of 72.5 – mostly wages. The industries page breaks this down.
What about super and tax?
Superannuation is 12% from 1 July 2026, and it applies to both wages and salaries. The difference between a wage and a salary does not change your super obligations. Tax is also the same – your employer withholds PAYG based on your total earnings. The how the index works page explains how we calculate the index from gross pay before tax and super.
Why the difference matters for your pay
Understanding the difference between a wage and a salary helps you know what to expect. If you are on a wage, your pay can go up and down with hours. If you are on a salary, you have predictable income but may work extra hours without extra pay. The salary index lets you compare any pay figure to the national line. For example, a junior worker under 18 on the national minimum wage earns $18.06 per hour, which annualises to about $35,217 (index 32.5). A senior professional on a salary of $150,000 has an index of 138.5.
For more on how to use the index, see topics.
The bottom line
The difference between a wage and a salary is not just about hourly versus annual pay. It affects your entitlements, your pay stability, and where you sit on the Australian salary index. Wages tend to be lower on the index, while salaries often reach or exceed the national line of 100. But there are exceptions – some salaries are below the line, and some wages (like casual rates with loading) can come closer. Always check your award or contract to know exactly what you are entitled to.
Questions people ask
What is the main difference between a wage and a salary in Australia?
A wage is usually paid by the hour and varies with hours worked, while a salary is a fixed annual amount paid in regular instalments. Under Australian law, a salary may include an agreement to cover minimum entitlements like penalty rates and overtime, whereas a wage often requires separate payment for those extras. The Fair Work Ombudsman notes that annualised wages under awards have specific rules, while salaries under contracts can offset entitlements.
How does the salary index help compare wages and salaries?
The Salary Index sets the national line at 100, based on full-time adult ordinary-time earnings of $2,083.70 per week (annualised $108,352). A wage like the national minimum wage ($26.44/hr, annualised $52,255) gives an index of 48.2, well below the line. A salary of $120,000 would have an index of 110.8, showing it sits above the national average. This makes it easy to see where any pay figure stands relative to the typical full-time worker.
Do awards affect whether you are paid a wage or a salary?
Yes. Many modern awards set minimum hourly wages for classifications, which are wages. Some awards also allow annualised wage arrangements where a fixed amount covers multiple entitlements. If you are on a salary under a contract, the award may still apply, and the salary must meet or exceed the award minimums. The Fair Work Ombudsman provides pay guides to check award rates.