What Is a Salary Sacrifice Statement and How It Relates to Awards and the National Minimum Wage

What Is a Salary Sacrifice Statement?

A salary sacrifice statement is a formal document that records an agreement between you and your employer to reduce your pre-tax salary in exchange for certain benefits. Common benefits include additional superannuation contributions, a car, or electronic devices. The statement shows the amount sacrificed, the benefit provided, and the resulting cash salary. It is an important record for both payroll and tax compliance.

Salary Sacrifice and the National Minimum Wage

Under Australian law, salary sacrifice cannot reduce your base pay below the national minimum wage. From 1 July 2026, the national minimum wage is $26.44 per hour, $1004.90 per week, or $52,255 per year. That gives an index of 48.2 on the Salary Index. This means the national minimum wage is just under half of the full-time adult ordinary-time earnings benchmark of $108,352 (index 100).

If you are on the national minimum wage, any salary sacrifice arrangement must leave you with at least that amount in cash. For example, if you earn $1,200 per week, you could sacrifice up to $195.10 per week before hitting the minimum. Your salary sacrifice statement should clearly show that your residual cash wage meets or exceeds $1,004.90 per week.

Salary Sacrifice and Modern Awards

Most Australian employees are covered by a modern award, which sets higher minimum rates than the national minimum wage. For instance, the Retail award has an entry-level adult rate of $25.74 per hour (award floor). The Hospitality award starts higher for some classifications. When a salary sacrifice statement is in place, your base pay must still satisfy the award minimum. The award rate is the absolute floor; you cannot sacrifice your way below it.

Awards also often include conditions about allowances, penalty rates, and overtime. Salary sacrifice does not affect those entitlements. Your salary sacrifice statement should be reviewed alongside your award classification to ensure compliance. For more on award pay rates, see our pay guides.

Where Does Your Pay Sit on the Salary Index?

The Salary Index compares your gross annualised ordinary-time earnings to the national line of $108,352 (index 100). This figure is your pay before any salary sacrifice deductions. So a salary sacrifice statement does not change your index value. For example:

• A retail worker earning $60,000 per year has an index of 55.4 (60,000 ÷ 108,352 × 100).
• A mining worker on $167,000 has an index of 154.7, matching the industry benchmark.
• A professional in scientific services earning $124,000 has an index of 114.7.

Your salary sacrifice statement may show a lower cash amount, but the index is based on the gross figure. This is important when comparing your pay to industry or state averages. For state comparisons, see our states page.

How Salary Sacrifice Interacts with Super and Tax

From 1 July 2026, the super guarantee is 12% on earnings up to $270,830. Salary sacrifice contributions to super are in addition to the compulsory employer contribution. Your salary sacrifice statement should separate these amounts. For tax purposes, salary sacrifice reduces your taxable income. The 2026–27 resident tax rates are:

• Nil on the first $18,200
• 15% on income from $18,201 to $45,000
• 30% on income from $45,001 to $135,000
• 37% on income from $135,001 to $190,000
• 45% on income above $190,000

Plus a 2% Medicare levy. A salary sacrifice statement helps you track how much tax you save. However, the index is based on gross pay, so your index remains unchanged.

Awards vs National Minimum Wage: Why It Matters for Salary Sacrifice

The writing angle here is awards versus the national minimum wage. If you are covered by an award, your minimum pay is higher. That means the room for salary sacrifice is smaller. For example, an award-covered employee earning $70,000 might only be able to sacrifice a few thousand dollars before hitting the award floor. An employee on the national minimum wage has even less room. Always check your salary sacrifice statement against the relevant award or the national minimum wage.

For a deeper look at how different industries compare, visit our industries page. The Mining industry index is 154.7, while Retail trade is 75.9 and Accommodation and food services is 72.5. These differences affect how much salary sacrifice is feasible.

Practical Tips for Reading a Salary Sacrifice Statement

• Look for the gross salary figure before sacrifice. That is your index number.
• Confirm the residual cash salary is at or above the award minimum or national minimum wage.
• Check that the benefit type (e.g., super, car) is correctly listed.
• Ensure the statement matches your pay slip.

If you are unsure whether your salary sacrifice statement complies with your award, consult the Fair Work Ombudsman or your union. For more on how the index works, see how the index works.

Conclusion

A salary sacrifice statement is a useful tool for managing your pay and benefits, but it must not breach minimum wage or award requirements. The Salary Index gives you a clear benchmark to see where your gross pay sits against the national average. Remember, the index is based on your earnings before sacrifice, so your statement does not change that number. Always keep your statement on file and review it alongside your award or the national minimum wage.

For more topics related to pay and conditions, browse our topics page.