Base salary in Australia, what employers must pay and document

Setting a base salary in Australia is not just a matter of picking a competitive number. The moment you commit to a figure, you take on obligations set by the Fair Work Act 2009 (Cth), any modern award or enterprise agreement that covers the role, and the superannuation guarantee rules. The salary must clear the applicable minimum, it must be paid for the hours it covers, super must be paid on top of it, and the arrangement has to be documented and recorded so it can be audited later. Since 1 January 2025, intentionally underpaying an employee has also been a criminal offence, so the cost of getting base pay wrong is higher than it has ever been.

This guide sets out what employers must do when they set a base salary in Australia: who the obligations apply to, the six duties that matter in practice, what happens if you breach them, and a checklist to work through before your next offer goes out.

Who has to comply, and what triggers the obligations

The duties below apply to employers in the national workplace relations system, which covers the great majority of private-sector employers in Australia, from a sole trader's first hire to a business with hundreds of staff. What you must pay depends on which instrument covers the role:

Modern award coverage: Most non-managerial roles are covered by a modern award, which sets a minimum base rate for each classification level, plus the overtime, penalty rates, loadings and allowances that apply to the work. Start by identifying the award.
Enterprise agreement: If a registered enterprise agreement covers the role, its base rate applies, but it cannot be less than the modern award rate that would otherwise apply, and the agreement must have passed the better off overall test when it was approved.
No award or agreement: The national minimum wage applies instead. From 1 July 2026 it is $1,004.90 per week based on 38 ordinary hours, or $26.44 per hour, and it is reset each year in the Fair Work Commission's annual wage review.
Contract only: Even where no award or agreement applies, you must still meet the national minimum wage, the National Employment Standards and the promises in the contract itself.

Whatever the instrument, the base salary you quote should track the statutory concept of base rate of pay. Under s 16 of the Fair Work Act 2009 (Cth), the base rate of pay is the rate payable for ordinary hours of work, excluding incentive-based payments and bonuses, loadings, monetary allowances, overtime or penalty rates and other separately identifiable amounts. In short, base salary is the fixed pay for the ordinary hours in the contract, before super and before any add-ons.

Duty 1: Get award coverage and classification right

The most common source of underpayment is not choosing too low a headline number. It is applying the wrong award, or the wrong classification level within the right award:

Identify the correct award: Modern awards cover most industries and occupations. The Fair Work Ombudsman's Pay and Conditions Tool is the practical way to check which award applies to a role and what the current minimum rates are. The annual wage review updates award minimum wages on 1 July each year, so last year's rates are no longer safe to rely on.
Set the classification from the duties, not the title: Awards set minimum rates by classification level, usually keyed to the skills and responsibilities actually exercised. A title like "office manager" does not determine the level; the day-to-day duties do.
Re-check when the role changes: When responsibilities grow, the classification may need to move up a level, which lifts the minimum base rate. Build a review trigger into your salary review process.
If an enterprise agreement applies, check the floor: Under s 206 of the Fair Work Act 2009 (Cth), the base rate in an agreement cannot be less than the modern award base rate for the same work; if it is, the agreement is read as if it paid the award rate. The agreement also had to pass the better off overall test set out in s 193 when it was approved.

Duty 2: Pay at least the minimum base rate

Once you know which instrument applies, the minimum base rate is the floor you build on:

Award-free employees: the national minimum wage order sets the floor. The current order, in force from 1 July 2026, sets the minimum at $1,004.90 per week for 38 ordinary hours, or $26.44 per hour, as recorded on the Fair Work Commission's national minimum wage page. Junior employees, trainees and apprentices have their own rates.
Award-covered employees: the minimum is the award rate for the classification, which will be higher than the national minimum wage. Annualised figures must still break down to at least the award rate for the hours worked.
Agreement-covered employees: the agreement rate applies, subject to the s 206 floor and the better off overall test.
Every 1 July, rates move: Both the national minimum wage and award minimums are reviewed annually and typically increase. Update payroll, and any salary that sits at or near the minimums, when the new order comes into operation, from the first full pay period starting on or after 1 July.

Duty 3: Pay super on top of base salary, every payday

Superannuation is a separate obligation, not a component of the salary you choose. The super guarantee (SG) rate has been 12 per cent of the relevant earnings base since 1 July 2025 and stays at 12 per cent, as set out on the ATO's super guarantee rates page:

Calculate on the right base: SG is calculated on what the employee earns for their ordinary hours, called ordinary time earnings (OTE): broadly, base salary plus most allowances and commissions, but not overtime payments. From 1 July 2026 the calculation base broadened to qualifying earnings, which also captures commissions and certain other payments. The ATO's guide to how much super to pay explains what counts.
Pay on each payday, not quarterly: The Payday Super rules that took effect on 1 July 2026 require SG contributions for each pay period, rather than the old quarterly cycle, with due dates tied to the payday. Payroll needs to be set up to calculate and pay SG with every run, including for leave payments and allowances that attract SG.
Decide, and state, "plus super" or "inclusive": If the contract says a salary is "inclusive of super", part of the quoted figure is treated as the super contribution. That can leave the employee with less take-home pay than a "plus super" arrangement at the same headline number, and it is a frequent source of disputes and shortfalls. If you use an inclusive figure, draft it carefully so the components are identifiable and the base rate still clears the award or national minimum wage floor after super is carved out.
Watch the maximum contribution base: You do not need to pay SG on earnings above the maximum contribution base, which is $270,830 for 2026-27.

Duty 4: Define what the base salary covers

A base salary buys ordinary hours, and only ordinary hours, unless the contract and any applicable instrument say otherwise:

Ordinary hours: The National Employment Standards cap full-time hours at 38 per week, plus reasonable additional hours, under s 62 of the Fair Work Act 2009 (Cth). Awards define ordinary hours and spans of hours for their industries. State the ordinary hours in the contract so it is clear what the base salary covers.
Overtime and penalty rates sit outside the base rate: By definition, the base rate excludes overtime and penalty rates, loadings, allowances and bonuses (s 16). If employees work weekends, public holidays, evenings or beyond ordinary hours, the extra amounts must be paid on top of base salary, not absorbed by it.
Annualised salaries and set-offs need a lawful basis: Many modern awards contain annualised salary clauses that allow you to roll up some entitlements into a flat rate, but only if the arrangement meets the award's requirements and the employee is better off overall. A contract term that lets you set off award entitlements against a generous salary is unenforceable to the extent it is unreasonable: under s 326 of the Fair Work Act 2009 (Cth), a term permitting a deduction for the employer's benefit has no effect if the deduction is unreasonable in the circumstances.

Duty 5: Document the arrangement in the contract

Payment of the amounts you owe has its own statutory rules, and the contract is where you remove ambiguity:

Pay in full, in money, at least monthly: Under s 323 of the Fair Work Act 2009 (Cth), amounts payable for work must be paid in full, in money (cash, cheque or electronic transfer), at least monthly.
State the essentials: The contract should record the annual base salary or hourly rate, the pay frequency, the ordinary hours and span of hours, whether super is plus or inclusive and the fund arrangements, and how overtime, penalties and any incentives are calculated, or that the award or agreement governs them.
Write incentive rules separately: Bonuses and commissions are variable pay. Define eligibility, targets, timing and what happens on resignation or termination, and keep them distinct from the guaranteed base.
Keep set-off wording lawful: If you rely on an annualised salary or a set-off arrangement, the drafting matters: a term that has the effect of letting the employer deduct for its own benefit will not stand if it is unreasonable (s 326), so have it reviewed rather than copying a clause from a template.
Review the contract as the role evolves: When hours, duties or classifications change, update the contract. Stale contracts are a common source of disputes and back-pay claims.

Duty 6: Keep records and issue payslips

The record-keeping rules that make an arrangement auditable are:

Records for seven years: Under s 535 of the Fair Work Act 2009 (Cth), you must make and keep employee records of the kind prescribed by the regulations for seven years, covering hours worked, classifications and payments.
Payslips within one working day: Under s 536, a pay slip must be given within one working day of paying the employee, showing the prescribed information.
The reverse onus bites if you do not: If you have not kept proper records, the law shifts the burden in proceedings: under s 557C, you may bear the burden of disproving allegations about what was paid and what was owed. In practice, missing records can turn a wage claim into an uphill fight even where you paid correctly.

What happens if you get base salary wrong

The consequences escalate from corrective orders to criminal prosecution:

Back-pay with interest: The first consequence is an order to pay the shortfall, often with interest, whether the claim comes from the employee, the Fair Work Ombudsman or the courts.
Civil penalties: Contraventions of the Act's civil remedy provisions attract pecuniary penalties set per contravention in penalty units, with the maximum for a body corporate set at five times the individual maximum under s 546 of the Fair Work Act 2009 (Cth), and substantially higher caps for serious contraventions. The Fair Work Ombudsman can investigate, issue compliance notices, accept enforceable undertakings and take proceedings.
Criminal prosecution for intentional underpayment: Since 1 January 2025, an employer who intentionally fails to pay amounts required by the Act or a fair work instrument commits an offence under s 327A. An individual faces up to 10 years imprisonment or a fine of the greater of three times the underpayment and 5,000 penalty units; a body corporate faces a fine of the greater of three times the underpayment and 25,000 penalty units. The Fair Work Ombudsman investigates and refers matters for prosecution. Small business employers who comply with the Voluntary Small Business Wage Compliance Code are protected from referral for criminal prosecution, but the protection only applies where the employer actually complied with the code.
Super shortfalls attract the super guarantee charge: If you miss a super payment, you owe the super guarantee charge rather than the contribution. The ATO explains that the charge includes the shortfall, a nominal interest component and an administration fee, and unlike ordinary super contributions it is not tax-deductible.
Individuals can be caught too: People knowingly involved in a contravention, including directors and managers who sign off on pay decisions, can be liable alongside the company.

A working compliance checklist

Before you make the next offer, and at least twice a year after that:

Confirm which modern award covers the role and the correct classification level, using the Fair Work Ombudsman's Pay and Conditions Tool.
Check the current minimum base rate, including the 1 July annual wage review increase.
Decide plus super or inclusive of super, and state it in the offer and contract.
Confirm ordinary hours, and model overtime and penalty exposure before you set a flat salary.
Make sure payroll calculates SG on the right earnings base for each payday under the Payday Super rules.
Update contracts when hours, duties or classification change.
Audit records and payslips against the award schedule twice a year, and keep the audit trail.

When a lawyer should be involved

A lawyer adds the most value where the rules are ambiguous or the exposure is real:

Award coverage or classification disputes: where the correct award or level is genuinely unclear.
Annualised salaries, fixed remuneration packages and set-off clauses: where drafting determines whether the arrangement survives scrutiny.
Enterprise agreements: including negotiating terms that pass the better off overall test.
Super shortfall remediation: where getting the calculation and disclosure right matters to the ATO and the employee.
Responding to a Fair Work Ombudsman investigation or a wage claim: and any decision about self-reporting an identified underpayment.

The check to run before your next offer

The two mistakes that cost employers most are assuming a generous headline salary quietly covers award entitlements, and letting payroll run on last year's settings. A high base salary does not absorb overtime, penalties, loadings or super unless there is a compliant arrangement behind it, and those arrangements do not survive on goodwill. The July 2026 changes make the point: new national minimum wage and award rates took effect on 1 July 2026, and Payday Super moved super from a quarterly task to a per-payday obligation.

Before your next offer goes out, pull up each role's classification, confirm the current award rate, check that super is being paid on every payday, and read the salary clause in your template as an employee would. If any of those steps raises a question, that is the moment to take the contract to a lawyer, not after an audit or a claim arrives.