What a Salary Package Meal Entertainment Means for Your Pay Under Awards
Understand how salary package meal entertainment interacts with award rates and the national minimum wage. Compare your pay to the national index of 100.
The value of a salary package meal entertainment benefit is not directly measured by the national index, but the underlying award wage can be compared to the national line of 100 (full-time adult ordinary-time earnings).
What is a salary package meal entertainment?
A salary package meal entertainment is a benefit where your employer allows you to sacrifice part of your pre-tax salary to pay for meal entertainment expenses—such as restaurant meals, catering, or event tickets—often through a salary packaging arrangement. This is most common in the not-for-profit, health, and aged care sectors, where employees can package up to a capped amount each year. The benefit reduces your taxable income, so you pay less tax and keep more of your earnings.
But how does this fit with the award system and the national minimum wage? This article explains the connection between salary package meal entertainment, award rates, and the national pay index.
Awards versus the national minimum wage
Australia’s pay system is built on modern awards, enterprise agreements, and the national minimum wage. The national minimum wage (from 1 July 2026: $26.44 per hour, $1,004.90 per week) is the legal floor for all employees not covered by an award or agreement. However, most employees are covered by a modern award that sets higher minimum rates for their industry and classification.
For example, the Accommodation and Food Services Award covers many hospitality workers. The award’s minimum rates are above the national minimum wage, but the industry as a whole has an index of 72.5—well below the national line of 100. That means the typical full-time worker in that industry earns about 72.5% of the national average full-time adult ordinary-time earnings ($108,352 annualised).
In contrast, the Professional, Scientific and Technical Services industry index is 114.7, meaning workers there earn about 14.7% above the national average. Award rates in that sector are also higher.
How salary packaging interacts with award rates
Salary packaging, including meal entertainment, does not change your award rate. Your gross salary must still meet or exceed the minimum award rate for your classification. The packaging is an arrangement on top of that: you choose to forgo some gross salary in exchange for a non-cash benefit (like meal entertainment vouchers). Your employer reports a lower gross salary to the ATO, but your award entitlement is still satisfied because the total value of cash plus benefit is at least the award minimum.
For example, if your award rate is $50,000 per year, and you salary package $2,650 in meal entertainment, your taxable salary drops to $47,350. But your total remuneration (cash + benefit) is still $50,000, so the award condition is met. The benefit is tax-free up to the cap, so you save tax on that $2,650.
Where does this sit on the national index?
The national index is calculated from gross ordinary-time earnings before any salary packaging. So if your gross award rate is $50,000, your index would be ($50,000 / $108,352) × 100 ≈ 46.1. That is below the national minimum wage index of 48.2, which is unusual because award rates are meant to be above the minimum. In practice, most award rates are higher than the national minimum wage, so your index would be higher.
If you work in an industry like health care (index 97.8), your gross earnings are close to the national average. Adding a meal entertainment package doesn’t change your index, but it improves your take-home pay. For a resident earning $100,000, the tax saving from a $2,650 meal entertainment package could be about $795 (at the 30% marginal rate plus 2% Medicare levy), assuming no other deductions.
Examples across industries
Consider a retail worker under the General Retail Industry Award. The retail industry index is 75.9, so a typical full-time retail worker earns about $82,200 annualised. If that worker can salary package meal entertainment (unlikely in most retail jobs, but possible in some large retailers), the benefit would be modest. The award rate for a retail employee level 1 is around $24–$25 per hour, which is above the national minimum wage but still low compared to the national average.
In contrast, a nurse in a public hospital (covered by the Nurses Award or an enterprise agreement) might earn $85,000–$100,000. Many public hospitals offer salary packaging including meal entertainment. The health care industry index is 97.8, so the nurse’s gross pay is near the national average. Packaging meal entertainment can save hundreds in tax each year.
Key considerations
- Award coverage: Check if your award allows salary packaging. Most awards are silent on the matter, but your employer’s policy and the Fair Work Act’s provisions on deductions apply. Salary packaging cannot reduce your pay below the award minimum.
- Caps and limits: The ATO caps meal entertainment benefits for not-for-profit employees at $2,650 per year (for the 2026–27 year, subject to indexation). For other sectors, caps may apply under your employer’s plan.
- Tax impact: The benefit is tax-free up to the cap, but it may affect your entitlement to certain tax offsets or government benefits.
- Index comparison: Your position on the Salary Index is based on your gross ordinary-time earnings, not your packaged amount. To see how your industry compares, visit our industries page.
How to find your award rate
Your award rate is the minimum you must be paid. You can find it on the Fair Work Ombudsman’s website or through your employer. If you are covered by an enterprise agreement, that agreement may set higher rates. The national minimum wage is the fallback if no award or agreement applies.
For a quick comparison, use our pay guides to see typical rates in your industry. Remember that junior rates, casual loadings, and penalty rates can change your actual hourly pay.
State differences
State indices vary. For example, Western Australia has an index of 106.9, meaning average full-time earnings are about 6.9% above the national line. Tasmania is 88.6, well below. If you work in a state with a higher index, your award rate may also be higher due to market factors. But award rates are national, so the same award applies across states. However, enterprise agreements can reflect local conditions.
See our states page for more details on how your state compares.
Conclusion
A salary package meal entertainment can be a valuable tax-saving tool, especially if you work in health care, not-for-profit, or other sectors where such benefits are offered. It does not change your award rate or your position on the national index, but it increases your take-home pay. Always check your award or agreement to ensure the arrangement complies with minimum pay requirements.
For a deeper understanding of how the index works, read how the index works. And for more topics related to pay and benefits, visit our topics page.
Questions people ask
Can I salary package meal entertainment if I'm paid under a modern award?
It depends on the award and your employer. Many modern awards do not specifically address salary packaging, but if your employer offers it as a benefit (often through a salary sacrifice arrangement), it may be allowed. However, salary packaging cannot reduce your pay below the award minimum wage. Check your award or enterprise agreement, and speak to your employer or a tax adviser.
How does salary package meal entertainment affect my comparison to the national index?
The national index (100) is based on gross ordinary-time earnings before any salary packaging. If you salary package meal entertainment, your gross salary remains the same for index purposes, but your taxable income decreases. Your take-home pay may be higher than someone earning the same gross without packaging. However, the index does not reflect packaging benefits, so your position on the index is determined by your gross award or agreement rate.
Is salary package meal entertainment more common in industries with low award rates?
Not necessarily. Meal entertainment packaging is most common in not-for-profit, health care, and social assistance sectors, where the industry index is 97.8 (close to the national average). In lower-paid industries like accommodation and food services (index 72.5), such packaging is rare because employers are often small businesses and the benefit is less common. Packaging is usually offered by larger employers with established salary sacrifice programs.