What is a salary? Awards versus the national minimum wage explained
Understand what a salary means in Australia, how awards and the national minimum wage set pay, and where your pay sits on the Salary Index.
A salary is gross annual pay before tax and super; the national minimum wage annualises to $52,255 (index 48.2), while award rates vary by industry and classification.
What is a salary in Australia?
A salary is the gross amount an employer pays you each year for your work, before tax and superannuation are taken out. The Australian Bureau of Statistics defines earnings as regular cash wages and salaries, including paid leave, but not irregular bonuses or non-cash benefits. When people ask “what is a salary”, they usually mean the annual figure in their employment contract.
But in Australia, your salary isn’t just a number you negotiate. It’s shaped by the national minimum wage, modern awards, or enterprise agreements. Understanding which one applies to you is the key to knowing whether you’re being paid fairly.
The national minimum wage vs award wages
From 1 July 2026, the national minimum wage is $26.44 per hour, or $1004.90 per week. That annualises to $52,255, which gives a Salary Index of 48.2 — meaning it’s about half the full-time adult ordinary-time earnings benchmark of $108,352 (index 100).
But the national minimum wage only applies if you’re not covered by an award or registered agreement. Most employees in Australia are covered by a modern award that sets minimum pay rates for their industry and job classification. Awards can pay more than the national minimum wage. For example, the entry-level award floor (the lowest rate in any award) is $25.74 per hour, which is actually below the national minimum. However, the award rate still applies — you don’t automatically get the national minimum if your award says less.
Fair Work Ombudsman explains that some awards have introductory rates for new employees, but those rates only last for a limited time. After that, you move to the next classification level, which is usually higher.
Casual loading and junior rates
If you’re a casual employee, you get a loading of at least 25% on top of the minimum wage. That makes the casual national minimum $33.05 per hour. Junior employees (under 21) are paid a percentage of the adult rate. For example, a 16-year-old gets $12.51 per hour, and a 20-year-old gets $25.83 per hour. These percentages come from the National Minimum Wage Order, but awards can set different junior rates.
How the Salary Index helps
The Salary Index puts your salary into perspective. It’s your gross annual pay divided by the national line ($108,352) times 100. So if you earn $80,000 a year, your index is about 73.8. If you earn $130,000, it’s about 120.
State and industry indices show how pay varies. For example, the Mining industry index is 154.7, while Retail trade is 75.9. Accommodation and food services is even lower at 72.5. On the state level, the ACT has the highest index at 109.9, and Tasmania the lowest at 88.6. You can explore more on our industries and states pages.
Tax and superannuation
Your salary is gross — you pay tax and Medicare levy from it. For 2026–27, resident tax rates start at 0% up to $18,200, then 15% to $45,000, 30% to $135,000, 37% to $190,000, and 45% above that. Plus a 2% Medicare levy. Superannuation guarantee is 12% from 1 July 2026, on earnings up to $270,830. That’s on top of your salary, not taken out of it.
So what is a salary?
A salary is your regular gross pay, set by your contract, but it must meet the legal minimum — either the national minimum wage or the applicable award or agreement. The Salary Index helps you see where your salary sits against the national average. Use our pay guides to check award rates, or see how the index works to calculate your own.
Remember, the figures here are benchmarks. Your actual pay depends on your award classification, experience, and negotiations. Always check with Fair Work Ombudsman or your employer if you’re unsure.
Key takeaways
- The national minimum wage from July 2026 is $26.44/hr, annualised $52,255 (index 48.2).
- Awards can set higher or lower rates; the award rate applies if you’re covered.
- Casual loading adds 25%, making the casual minimum $33.05/hr.
- Junior rates are a percentage of the adult minimum.
- The Salary Index benchmark is $108,352 (index 100).
For more detail, visit Salary Index or explore topics related to pay in Australia.
Questions people ask
What is the difference between a salary and a wage in Australia?
In Australia, 'salary' usually refers to a fixed annual amount paid to an employee, often for professional or managerial roles, while 'wage' is typically paid by the hour or week. Both are forms of earnings, but the term 'salary' is commonly used for employees who are not paid by the hour. The Fair Work Ombudsman uses 'minimum wage' to cover both salaried and waged employees, as long as the pay meets the legal minimum.
How does the Salary Index work?
The Salary Index compares your gross annual salary to the national benchmark of full-time adult ordinary-time earnings, which is $108,352 per year (index 100). Your index is calculated as (your gross annual salary ÷ $108,352) × 100. For example, the national minimum wage annualised to $52,255 gives an index of 48.2. This helps you see where your pay sits relative to the average Australian full-time worker.
What happens if an award pays less than the national minimum wage?
Some awards have introductory or junior rates that are lower than the national minimum wage. However, if you are covered by an award, the award rate applies, even if it is below the national minimum. The Fair Work Ombudsman explains that the minimum wage set out in the award will apply instead of the national minimum wage. Always check your award or use the Pay and Conditions Tool to find your correct minimum pay rate.