Contact Us
Hero Image

Salary and Wages

Wage & Pay

8 May 2025 (Last updated 3 Dec 2025)

Share on:

The definition of an employee in the Employment Relations Act 2000 requires that they do work for hire or reward under a contract of service.

An employer is required to reward or pay an employee for the work that they perform.

Salary and Wages

The employment agreement will usually set out the employees’ pay. Common terms in the agreement are “wages” or “salary”, which are essentially different descriptions of the same thing, namely the employee’s remuneration for work performed.

The Wage protection Act 1983 defines the term “wages” as salary or wages; and includes time and piece wages, overtime, bonus, or other special payments agreed to be paid to a worker for the performance of service or work and includes any part of any wages.

Wages

Wages generally refer to pay calculated on an hourly, daily or weekly basis.

As of 1 April 2025, the minimum wage rate for employees 16 years or older is:

  • Adult wage: $23.50 per hour.
  • Starting-Out wage: $18.80 per hour.
  • Training wage: $18.80 per hour.

Salary

Salaries, which form part of the definition of wages, are generally calculated on an annual basis and are typically used where the employee works set hours and days each week. The employee on a salary would usually be paid a set amount or pre-determined amount for each pay cycle.

The conditions of an annual salary and the associated entitlements must be outlined between employer and employee in an employment agreement. Negotiating a salary is common practice in most industries and is often crucial to meeting the needs of the individual and the business.

When paying salaried employees, the employer must ensure that their hourly rate is at least equal to the minimum wage. Often salaried employees are paid considerably higher than the minimum wage to accommodate for any overtime the employees may work.

Negotiating an annual salary

Annual salary negotiations give the employer and employee a chance to discuss the terms of an employment agreement. The purpose of negotiating a salary is to reach a mutual agreement that not only falls in line with the current market – but satisfies the needs of the individual and the financial limitations of the employer.

Employers should be prepared to make an offering that guarantees long-term success for the business and the employee.

A key benefit of salary negotiation is that it allows open and transparent communication between the employee and the employer. The employee displays their trust and willingness to commit to the job and are provided an opportunity to voice concerns and discuss their future.

Strategies for employers in salary negotiations

  • Be honest- Employers should be honest when setting employment packages and during salary negotiations. Misleading employees with promises and backing out of them can affect their morale and trust in the employer.
  • Be confident- An employer or hiring manager, should give confident but clear responses on the practical nuances of salary raises and its implications.
  • Have data on hand- Coming prepared to the meeting with data and notes can send a positive sign to an employee and boost their confidence in the business. This data can relate to their past performance, contribution to the company growth, and the future of their role within the company. This data can support employers with any answers they may need to give, and it will also avoid any miscommunication or relying on memory for key details.
  • Understand salary trends- Understanding current salary trends can help employers back their decisions with rationale and accurate information. Knowing the current salary trends for particular roles or industries allows employers to set a realistic bar on how high or low the salary can go.

By appealing to the specific needs of people, rather than focusing on the numbers, employers can make an enticing offer that is mutually beneficial to both parties.

Gross pay vs net pay 

The law requires employers to provide their employees with pay slips, including the amounts earned for gross and net pay.

Gross Pay Net Pay
Gross pay refers to the total amount of money an employee earns from performing work. Net Pay is also referred to as “take-home pay” and is the actual amount of money an employee is paid once any relevant deductions (such as PAYE) have been made (ie taken off their gross pay)
Gross pay does not include any deductions that may be made.

Crimes (Theft by Employer)

The Crimes (Theft by Employer) Amendment Act 2025 (the Act) came into force on 14 March 2025.

The Act provides that an employer’s intentional failure to pay an employee any money owed in relation to their employment, will amount to theft. For this to amount to a crime, the employer’s failure to pay must be without a reasonable excuse.

What amounts to a “reasonable excuse” will be subject to the facts of each case and the interpretation by the courts. Generally, factors such as a glitch or circumstances outside of the employer’s control may be considered a reasonable excuse, in which case no crime was committed.

The Act also provides the maximum penalties for the offence of theft by an employer. If the employer is an individual, the maximum penalty would be 1 year’s imprisonment, a fine of $5,000, or both. In any other case, the maximum penalty would be a fine of $30,000.

The Act is intended to apply to employers who owe wages and intentionally do not pay them to the employee. This would include the unlawful withholding of wages, salaries, and other monetary entitlements within an employment relationship.

Understanding salary and wages with Peninsula 

At Peninsula, we work to provide you specialised support and services in employment relations and health and safety at work. Our team is committed to tailoring our advice for your particular situation and circumstance. Call us today.

Have a question?

Have a question that hasn't been answered? Fill in the form below and one of our experts will contact you back.

By clicking submit you consent to our Privacy Policy

Related Guides

Wage & Pay

Wage & Pay

Wage & Pay

Remuneration

You may use different terms or words when discussing payments associated with jobs. Some of the common terms we often hear include salary, wages, pay, and remuneration. Employers in Australia need to be aware of these terms, their meanings, and their differences. It is crucial that they understand their responsibilities and how each term covers a different aspect of payment. Understanding these terms is important as it will help you avoid underpayments, and any potential penalties associated with underpayments. In this guide we explain remuneration, what is a remuneration package, and the key differences between remuneration and salaries for employees. Remuneration In Australia, it has different meanings in different states when it comes to worker’s compensation or premium calculation. For example, in New South Wales, the 1987 Act says, generally, a payment to a worker is ‘remuneration’ if it is made to, or for the benefit of the worker. Remuneration is any type of compensation or pay for providing services. The term includes pay in the form of a salary, wage or commission, but can also incorporate non-monetary incentives and allowances such as a company car, medical plan, accommodation, or meals. Competitive remuneration can assist in attracting top quality candidates and make existing staff happier and more productive. Extra allowances like bonuses and holidays can incentivise performance and retain key staff for longer as well as attracting more talented employees. To ensure alignment, it is recommended businesses develop a remuneration policy. This policy could incorporate an outline of the guiding principles that decide how the company compensates staff and provide clarity in terms of current market rates, as well as superannuation, minimum entitlements, and any extra benefits. Remuneration Package Remuneration packages are based on a mutual agreement between the employer and employee. For this reason, employers are reasonably free to structure remuneration packages as they see fit if the employee agrees. However, the package must also satisfy the minimum pay and conditions of employment under the National Employment Standards (NES) contained in the Fair Work Act 2009 or the minimum wage under the applicable Modern Award or enterprise agreement covering your employee for the employee’s classification. It should also meet any additional requirements in the employment contract. The remuneration package should be structured according to the employee’s role and responsibilities, industry standards, and the current market rate for similar positions, taking into consideration the location of work and any skill shortages within the industry. Below are the most common types of remuneration and their meanings. Commission Pay Employees on a commission agreement are paid according to their results, generally the amount they sell. Employees are generally partially or additionally compensated by commission payments. An employee can be paid on a commission only basis when an employee is award free, or an award or enterprise agreement allows an employee to be paid this way. An employer is usually free to structure incentive-based commission payments as they wish to encourage high performance, however employees must earn at least the national minimum wage or the award minimum rate for their classification. Commonly, sales-based commission will maintain strict criteria of a minimum number of sales or value of deals, and once achieved engage a commission payment of a fixed amount or percentage of value. Piece Rates A piece rate is where an employee gets paid for every piece, item or task completed.   Each job, hour or other unit is paid separately, rather than periodically. For example, the ‘piece’ could be the amount of fruit picked or the number of items packed in a certain period of time. Piece rates are typically paid instead of an hourly, daily or weekly wage – but there are exceptions in some industries. Piecework agreements must be in writing and set out the pay rate per piece and how results are measured. If there is no formal agreement, the employee is not considered a piece worker and must get the national minimum hourly or weekly rate according to their applicable Award. An employee can only be paid via piece rates if their Modern Award or Enterprise Agreement allows for this method of payment, in which case they must earn at least the minimum award rate for the job they do, or if the employee is Award-free then they must receive at least the national minimum wage. Remuneration Bonuses and Incentives Depending on the company remuneration policy and employment contracts, some employees may receive a bonus. These bonuses can be rewarded to an individual for good performance or the whole team after a particularly successful project, quarter, or year. Businesses may offer a range of cash and non-cash incentives. These incentives are designed to reward employees who go above and beyond the expectations of their role. Good incentives not only help employees feel valued and motivated – they can boost employee satisfaction and performance over the long-term. What Is The Difference Between Remuneration, Wage And Salary? Remuneration Remuneration is a broader term that covers both salary and wages. Remuneration is all the compensation an employee receives for services rendered, both monetary and non-monetary. A wage is a rate of pay affixed to the amount of hours worked, generally a short period of time such as per hour, or per day.  A salary is a fixed regular payment, usually monthly or annually, agreed upon in an employment contract, however it is not affixed to the number of hours performed and can incorporate additional entitlements such as overtime, penalty rates and loadings. Wages Remuneration in the form of wages must ensure the employee base hourly or weekly rate is equal to or greater than the National Minimum Wage or the minimum rate of pay mandated under an employee’s applicable modern award or registered agreement for the job that they do. An employment contract can stipulate a higher rate of pay. Where a Modern Award applies to a wage employee,  in addition to the base rate of pay for working their ordinary hours they may be entitled to overtime pay, penalty rates, loadings and allowances, depending on the job they do and when they work and how they are engaged by the business. Salaries A salary describes a regular and fixed payment that you provide an employee. Salaries are paid either once a month, fortnightly, or weekly, but it is often expressed as an annual amount. The frequency of the salary is mentioned in the employment contract. A salary is also subject to change if an employee receives a promotion or reduces their hours. Employees will not usually receive additional remuneration benefits such as overtime pay or penalty rates. However, it is important to remember a salaried employee is still required to receive all the same entitlements as a wage worker under the NES or applicable Modern Award or enterprise agreement for the job they do. This will mean if the employee works excessive hours, the salary package must be of equivalent or greater value than the sum they would have received under the applicable Modern Award or enterprise agreement for the hours they worked, at the time they worked them. A base salary refers to the amount earned by an employee before any additional payments are added or necessary deductions are made. A salary package refers to an agreed amount between employer and employee that consists of the employee’s salary and one or more additional benefits such as share options, allowances, incentives, or bonuses. Before accepting a salary offer, employees can negotiate on remuneration and other policies in their contract. These negotiations can extend beyond the base salary and cover discussions about work arrangements, benefits, and other amenities. Salary agreements should be recorded in writing, and identify which entitlements are included in the payment. The employer should reconcile the agreement annually with the amount the employee would have earned under the award or enterprise agreement for the hours worked. Unlock HR and WHS support with Peninsula Employers have a legal obligation to pay their employees correctly and efficiently. Failure to do this can result in severe penalties. If you need help understanding remuneration and remuneration packages, Peninsula has resources such as factsheets, documents, and webinars designed for your needs. Peninsula offers customised support, advice, and resources for Aussie SMEs and employers. Get access to 24/7 advice and support when you become a client with Peninsula. From recruitment to health and safety, we can provide guidance for every issue. Call us on 1300933819 today.

View all guides

Do you have any questions regarding Wage & Pay?

International Sites

United Kingdom

Republic of Ireland

Northern Ireland

Scotland

Canada

Australia

© 2025 Peninsula Employment Services Ltd. Registered Office: 8 Tangihua Street, Auckland CBD 1010

Peninsula Protect is a discretionary risk product issued by Peninsula Mutual Limited ACN 630 256 478 AFS Licence No. 544232. Peninsula Mutual Limited has appointed Peninsula Group NZ Limited NZBN 9429042175179 to distribute the discretionary risk product in New Zealand. To decide if this product is right for you, please read the Peninsula Protect Product Disclosure Statement (PDS) and Target Market Determination.