Salary vs Total Package - A Critical Distinction
Many Australians accept job offers without understanding whether quoted figures are 'base salary', 'total package', or 'total cost to company' - terms that can represent very different take-home amounts.
- Base salary: The fixed annual salary before superannuation. SG (11.5% in 2025-26) is paid in addition. A $100,000 base salary costs the employer $111,500
- Package inclusive of super: Many employers quote '$100,000 package inclusive of super' - meaning base salary is $89,686 and SG ($10,314) makes up the balance. You receive significantly less than you may have assumed
- Total cost to company (TCC): Some employers include all on-costs - SG, workers compensation insurance, payroll tax, fringe benefits. TCC can be 15-20% above the base salary. It is not money you receive
- How to verify: Ask specifically: 'Is the quoted figure base salary plus super on top, or inclusive of super?' Get it in writing in the offer letter
- Base salary matters for: SG calculation (employer pays 11.5% on top), overtime calculations (based on ordinary rate), leave payments (annual leave, personal leave), and redundancy calculations
- Bonus and commission: Check whether bonuses are discretionary (employer can choose not to pay) or contractual (enforceable). Discretionary bonuses are not guaranteed - do not factor them into essential budget calculations
- Salary sacrifice impact on SG: If you salary sacrifice $20,000 to super, your SG may be calculated on the reduced salary ($80,000) unless your contract specifies SG is based on the pre-sacrifice salary. This can reduce employer SG by $2,300/year - always confirm in writing
National Employment Standards: Your Minimum Entitlements
The National Employment Standards (NES) under the Fair Work Act 2009 set minimum employment entitlements that cannot be contracted out of - even if your contract says otherwise, these rights apply.
- Annual leave: 4 weeks per year (full-time), accruing continuously. Shift workers on 7-day rosters receive 5 weeks. Annual leave loads of 17.5% apply under most awards
- Personal/carer's leave: 10 days per year - can be used for personal illness, caring for family members, or family and domestic violence leave. Casuals receive 5 days unpaid carer's leave
- Parental leave: Up to 24 weeks of unpaid parental leave after 12 months of employment. From July 2025, the government's Paid Parental Leave (18 weeks at national minimum wage) includes SG contributions
- Public holidays: Employees are entitled to be absent on public holidays without loss of pay. If required to work, award or agreement rates apply (typically 250% of ordinary rate)
- Notice of termination: Minimum notice periods by length of service - under 1 year: 1 week; 1-3 years: 2 weeks; 3-5 years: 3 weeks; over 5 years: 4 weeks. Workers over 45 with 2+ years service receive an extra week
- Fair Work Information Statement: Employers must provide this statement to all new employees - it summarises NES rights
- Modern awards: Most employees are covered by a modern award in addition to the NES - awards set minimum rates, overtime, allowances, and penalty rates. Check your award at fairwork.gov.au
Redundancy Entitlements Under the Fair Work Act
If you are made genuinely redundant, you are entitled to statutory redundancy pay under the Fair Work Act - on top of your notice period and any accrued leave. Understanding these entitlements prevents employers from underpaying.
- Genuine redundancy: The position must be genuinely redundant - the employer must not require the work to be done and must have complied with consultation obligations under any applicable award or agreement
- Redundancy pay scale (Fair Work Act):
- 1 year: 4 weeks; 2 years: 6 weeks; 3 years: 7 weeks; 4 years: 8 weeks; 5 years: 10 weeks; 6 years: 11 weeks; 7 years: 13 weeks; 8 years: 14 weeks; 9 years: 16 weeks; 10+ years: 12 weeks (reduces - this is correct, not a typo)
- Tax-free component: Genuine redundancy payments include a tax-free threshold - $12,524 + $6,264 per completed year of service (2025-26 figures, indexed annually). The tax-free portion is excluded from assessable income entirely
- Example - 10-year redundancy: Salary $120,000. Tax-free: $12,524 + ($6,264 × 10) = $75,164. Redundancy pay: 12 weeks × $120,000/52 = $27,692. Entire redundancy payment is within the tax-free amount - zero tax
- Notice period: Notice (or payment in lieu) is paid on top of redundancy. If the employer pays out 4 weeks notice, you receive full salary for that period - taxed as ordinary income
- Leave balances paid out: Accrued annual leave is paid out at termination (taxed as income). Long service leave entitlements depend on state law and years of service
- Small business exemption: Employers with fewer than 15 employees are exempt from paying redundancy (though notice still applies). This is an important distinction for workers at small businesses
Notice Periods: Your Rights and Obligations
Notice obligations run both ways - your employer must give you notice, and you must give your employer notice when resigning. Understanding both sides prevents financial and legal complications.
- Employer notice: Minimum statutory notice periods apply (see NES above). Your contract may specify longer notice - if so, the contract term applies (it cannot be less than the statutory minimum)
- Payment in lieu of notice: Instead of working out notice, your employer can pay your salary for the notice period and release you immediately. This is common in redundancy. The payment is assessable income (not tax-free)
- Employee notice obligations: Your contract will specify the notice you must give when resigning - typically 2-4 weeks for junior staff, 4-12 weeks for senior roles. Failing to provide contractual notice may allow the employer to withhold accrued entitlements (in some states) or pursue damages - though in practice this is rare
- Garden leave: During notice period, your employer may place you on 'garden leave' - full pay but not permitted to attend work. You remain an employee and cannot commence new employment during this period without risking breach of contract
- Constructive dismissal: If your employer makes your working conditions intolerable in order to force a resignation, this may constitute constructive dismissal - treated as termination, entitling you to redundancy and other entitlements. Seek Fair Work or legal advice
- Unfair dismissal: Employees with at least 6 months' service (12 months at small businesses) who are dismissed without a valid reason or fair procedure can lodge an unfair dismissal claim with the Fair Work Commission - must be lodged within 21 days of dismissal
Restraint of Trade Clauses
Many Australian employment contracts include post-employment restraint clauses - restricting your ability to work for competitors, solicit clients or staff, or use confidential information after leaving. The enforceability of these clauses is complex.
- What restraints cover: Non-compete (cannot work for a competitor for a defined period), non-solicitation of clients (cannot contact former clients to take business), non-solicitation of staff (cannot recruit former colleagues), and non-disclosure (cannot reveal confidential information)
- Enforceability test: Australian courts (and NSW courts in particular) apply a 'reasonableness' test - a restraint must be no wider than necessary to protect a legitimate business interest. Overly broad restraints are often found unenforceable
- Legitimate interests: An employer has a legitimate interest in protecting genuine trade secrets, confidential client relationships developed through the role, and specialised training provided to the employee
- Cascading restraints: Many contracts include cascading restraint clauses - '12 months, failing which 6 months, failing which 3 months; Australia-wide, failing which NSW' - designed to survive enforceability challenges. Courts apply the most restrictive enforceable combination
- Seniority matters: Senior executives, partners, and sales professionals with deep client relationships face higher enforceability risk than junior employees. A 12-month non-compete on a receptionist is almost certainly unenforceable; the same clause on a CFO may be upheld
- Before you resign: If your contract has restraint clauses, get legal advice from an employment lawyer before moving to a competitor. Breaching a valid restraint can expose you to injunctions (court order stopping you working) and damages
- Negotiating at entry: The time to negotiate restraint clauses is before signing an offer - not after. Request narrower geographic scope, shorter duration, or specific role limitations
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