How Much Should I Pay My Employees? A Practical Salary Guide for Australian Employers (2026)

Hiring someone new often starts with a deceptively simple question: “What salary should we offer?”

A business owner might look at a job advertisement, ask another employer what they pay or take the salary their previous employee earned and add 5%. Those methods may provide a starting point, but they do not necessarily produce a competitive, affordable or legally compliant salary.

In Australia, the practical answer comes from three checks: the legal minimum, the market rate for comparable work, and the total cost your business can sustain. Here is how to make that decision without needing a large HR team.

What is the minimum salary I can pay an employee in Australia?

First determine which minimum employment rules apply. For most employees, this means identifying the relevant modern award and classification level, or a registered enterprise agreement where applicable. The national minimum wage applies to eligible employees who are award and agreement free; it is not the default pay rate for every role.

From 1 July 2026, the adult national minimum wage for award- and agreement-free employees in the national system is $26.44 an hour or $1,004.90 a week for a 38-hour week, before tax. Casual employees covered by this national minimum wage also receive the applicable 25% loading. Award rates, penalties and allowances can require higher payments.

To check a role, use the Fair Work Ombudsman's Pay and Conditions Tool and award classification guidance. Record the award, classification and date of the pay guide you used.

Practical example: An office employee's job title might say “Administration Coordinator”, but the correct award classification depends on actual duties, supervision, experience requirements and responsibilities. A job title alone does not establish the minimum salary.

How do you know what the market pays?

Minimum wages answer what you must pay, not what is necessary to recruit or retain the person.

For market benchmarking, compare roles based on their responsibilities rather than title alone. A Finance Manager in a business with 20 employees may manage payroll, invoicing and month-end reporting, while another Finance Manager may lead a large team, own treasury and report directly to the board. The titles match, but the job sizes may not.

Before collecting salary data, write down:

• Role scope: Main responsibilities and decisions the employee makes.
• Seniority: Experience, expertise and the level of independence required.
• People management: Number and type of direct reports, if any.
• Company context: Industry, organisation size and complexity.
• Location: Where the role is performed and the relevant recruitment market.
• Pay definition: Whether figures include superannuation, bonuses or other benefits.

Compare multiple credible sources, such as structured remuneration surveys, relevant recruitment data and verified employer disclosures. Job advertisements can help identify what employers are offering, but they are not a complete record of salaries actually paid, and advertised ranges may reflect very different job scopes.

Should you pay below, at or above the market median?

A useful salary benchmark commonly shows the 25th percentile (P25), median (P50) and 75th percentile (P75). These are market reference points, not prescribed amounts.

Imagine a hypothetical salary benchmark for an Operations Coordinator:

These numbers are examples of how to interpret salary data, not verified Australian market rates for the role.

A candidate who has the required experience and can perform the role independently might reasonably be considered around $82,000. A less experienced candidate might be positioned lower, while someone with additional supervisory responsibility may justify a higher amount. Check the role's actual legal minimum separately before choosing any salary.

Worked example: setting the salary for a new employee

Assume a Sydney-based business wants to employ an Operations Coordinator and has validated a hypothetical relevant market median of $82,000 base salary.

The business interviews two candidates. Candidate A has two years of experience and will need guidance on complex work. Candidate B has seven years of relevant experience and can independently supervise scheduling and client escalations.

A reasonable starting decision might be:

Neither number is automatically right or wrong. The employer should document why the offers differ, check internal pay fairness and confirm the applicable minimum entitlements.

One important rule is to avoid paying someone more simply because they negotiated more aggressively. Similar roles with comparable capability and responsibility should be assessed consistently.

How much does an $85,000 employee really cost?

An employee's base salary is not the complete employment cost.

For a full-time employee paid $85,000 base salary plus superannuation, the 12% super guarantee produces a simple annual salary-and-super cost of:

$85,000 + ($85,000 × 12%) = $95,200.

But the true budget may also include workers compensation insurance, payroll tax where applicable, paid leave liabilities, recruitment fees, equipment, training, software and any variable remuneration. The exact treatment depends on the state, employer circumstances, earnings definition and applicable rules.

The $3,000 provision is purely illustrative and is not a statutory employment on-cost. Paid leave is usually part of an employee's base salary for ordinary paid leave, so do not automatically add another four weeks of salary on top of the annual salary as if it were a separate cash expense. Instead, consider leave liability, backfill and lost productive time where relevant.

2026 payroll note: From 1 July 2026, Australia's Payday Super rules require applicable super contributions to be paid with wages and generally received by the employee's fund within seven business days, subject to exceptions. Budgeting must therefore consider contribution timing as well as cost.

Should I offer a package including super or a salary plus super?

Both terms appear in Australian employment discussions, but they are not interchangeable.

$90,000 base salary plus 12% super means a simplified fixed package of $100,800.

$90,000 total fixed package including 12% super, assuming all salary is qualifying earnings and no special rules apply, implies approximately $80,357 base salary and $9,643 superannuation.

The difference is substantial. When advertising and negotiating salaries, state explicitly whether superannuation is included, and ensure that the actual payment arrangement meets applicable legal obligations.

What if I pay a high salary instead of overtime?

A higher annual salary does not automatically remove an employee's entitlement to overtime, penalties, allowances or annual leave loading under an applicable award or agreement.

Some awards allow annualised wage arrangements with specific requirements for documentation, recordkeeping, outer limits and reconciliation. Contractual salary offset arrangements also have legal conditions. Employers should compare the salary paid against the employee's actual minimum entitlements over the relevant period rather than assuming the salary covers everything.

For practical guidance, read Fair Work's annualised wages and salaries explanation.

What if my employee asks for a pay rise?

Before deciding on the increase, ask whether their current role has grown, how their salary compares with a relevant market benchmark and whether there is an internal pay issue.

For example, an employee earning $75,000 against an illustrative validated market median of $82,000 is positioned at approximately 91.5% of median. A 4% pay rise would increase salary to $78,000, still approximately 95.1% of median.

A general annual increase and a market adjustment solve different problems. An employer might reasonably give an annual increase for ongoing performance and separately address a documented market gap, provided the business can afford the outcome.

A simple salary-setting framework for small businesses

You do not need a complicated job grading system for every role. Start with a one-page record containing:

Even a small company can maintain this in Excel. The important part is using consistent salary definitions and updating the information when responsibilities or market conditions change.

Questions Australian employers commonly ask

Is the award minimum the same as the market salary?

No. The award or agreement establishes minimum entitlements; salary benchmarking helps determine competitive pay for a comparable role. An employee can be legally paid above the minimum and still be significantly below the relevant recruitment market.

Should I match the salary offered by a larger company?

Not necessarily. Compare role scope, organisation complexity, career opportunities and the full remuneration package. Larger organisations may have broader responsibilities and different recruitment markets.

Can I give two people with the same job title different salaries?

Potentially, where differences are objectively supported by responsibilities, skills, experience, performance or another legitimate factor. Review pay equity and applicable discrimination obligations, and avoid relying only on negotiation history.

How often should I review employee salaries?

An annual review is useful, but also reassess pay when awards change, responsibilities expand, recruitment becomes difficult or an employee's salary falls materially behind the relevant market.

Where can I find Australian salary data for a specific job?

Start with your applicable minimum pay requirements, then use market sources that match the role's duties, seniority, location and industry. If you are comparing several roles or building salary bands, a structured remuneration benchmarking exercise can produce more consistent results than job advertisements alone.

Before you approve an employee salary

• I know whether an award or enterprise agreement applies.
• I have checked the correct classification and current minimum entitlements.
• I have compared responsibilities rather than relying on the job title.
• The market information uses consistent base salary definitions.
• I have considered experience, role scope and internal pay fairness.
• The offer clearly states whether superannuation is included.
• The business has budgeted for superannuation and other employer costs.
• Any annualised salary or offset arrangement has been checked.
• I have documented the decision and when it will be reviewed.

The practical takeaway

The right salary is rarely one figure copied from a job advertisement. Australian employers need to establish the legal minimum, determine what comparable roles command in the market, and select a sustainable salary that reflects the employee's responsibilities and capability.

That process can be simple, but it should be consistent. A small business that documents these decisions will be in a much better position to recruit confidently, retain employees and explain why people are paid what they are.

Not sure what to pay a new employee or whether your current salaries are competitive? Contact Remunera for Australian salary benchmarking, market salary ranges and practical remuneration advice tailored to your organisation.

Sources and further reading

• Fair Work Ombudsman: Minimum wages
• Fair Work Ombudsman: Award classifications
• Fair Work Ombudsman: Annualised wages and salaries
• Fair Work Ombudsman: Tax and superannuation
• Australian Government: Guide to hiring employees

Figures and employer-cost scenarios in the worked examples are illustrative and are not job-specific market salary benchmarks. Minimum wage and superannuation information reflects rules applying in October 2026 and should be checked again before implementation.