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Salary Sacrificing into Super Pros and Cons: Hourly to Annual Pay Guide
Based on a 38-hour week, annual gross pay is hourly rate × 38 × 52, with super at 12% on top.
Introduction
Whether you're negotiating a salary offer, comparing job ads, or planning your finances, converting an hourly rate to annual pay is a fundamental skill. This guide explains the conversion formula, the role of the National Minimum Wage and award rates, casual loading, superannuation, and the important topic of salary sacrificing into super pros and cons. We use the 38-hour week as the standard full-time benchmark, as set by the Fair Work Ombudsman and the Fair Work Commission.
Converting hourly to annual pay
The basic formula is simple: hourly rate × hours per week × 52 weeks. This gives your annual gross pay before tax and super. For a full-time employee working 38 hours per week, the calculation becomes:
Annual gross = hourly rate × 38 × 52
For example, at the National Minimum Wage of $26.44 per hour (from 1 July 2026), the annual gross is $26.44 × 38 × 52 = $52,245.44. Super guarantee of 12% is paid on top, adding $6,269.45, bringing total remuneration to $58,514.89.
The 38-hour week assumption
The 38-hour week is the standard ordinary hours for full-time employees under most awards and the National Employment Standards. If you work different hours – say 40 hours – adjust the formula accordingly. Our the timesheet, pay guides, and reference tables all use 38 hours as the default, but you can change it.
Fortnightly pay
Many employers pay fortnightly. To find your gross fortnightly pay, multiply your weekly pay by 2. Using the minimum wage example: weekly pay = $26.44 × 38 = $1,004.90; fortnightly = $2,009.80. Super is usually calculated on each pay period and must be paid within 7 business days under the new Payday Super rules from 1 July 2026.
National Minimum Wage vs award rates
The National Minimum Wage ($26.44 per hour) is the legal floor for employees not covered by an award or registered agreement. However, most industries have modern awards that set higher minimum rates for specific roles. For example, a retail employee may be entitled to a higher rate under the General Retail Industry Award. Always check your applicable award via the Fair Work Ombudsman website. Our minimum wage page has more details.
Casual loading
Casual employees receive a loading (typically 25%) on top of the base hourly rate to compensate for not receiving paid sick leave, annual leave, or public holiday pay. The casual rate for the National Minimum Wage is $33.05 per hour ($26.44 + 25% = $33.05). This loading is part of ordinary earnings for super guarantee purposes. When using the timesheet, tick the 'casual loading' checkbox – do not enter a rate that already includes loading. The tool will add 25% automatically.
Superannuation guarantee
Employers must pay super guarantee of 12% of an employee's ordinary earnings on top of their salary. This applies to most employees over 18 (or under 18 and working more than 30 hours per week). The super must be paid into the employee's nominated fund by the payday deadline (within 7 business days). The maximum contribution base for super guarantee is $270,830 per year – earnings above that are not subject to compulsory super. The Australian Taxation Office enforces these rules. For more, see our super and packaging page.
Salary sacrificing into super pros and cons
Salary sacrificing into super (also called salary packaging) is an arrangement where you and your employer agree to divert part of your pre-tax salary into your super fund. This reduces your taxable income, meaning you pay less income tax. The contributions are taxed in the super fund at 15%, which is generally lower than your marginal tax rate. However, there are important trade-offs.
Pros
- Tax savings: If your marginal tax rate is 30% or higher, you save the difference between that rate and the 15% super tax. For example, on $10,000 sacrificed, you save $1,500 in tax (30% vs 15%).
- Super balance grows faster: More money in super means more compounding over time.
- No fringe benefits tax: Salary sacrifice super contributions are not considered a fringe benefit, so your employer does not pay FBT on these contributions.
- Employer still pays full super guarantee: Your employer must still pay 12% on your ordinary earnings as if no sacrifice existed – the sacrifice does not reduce the base for super guarantee.
Cons
- Lower take-home pay: Your cash salary decreases because you receive less after-tax income. You need to ensure you can still meet living expenses.
- Concessional contributions cap: The yearly limit for before-tax contributions (including employer super guarantee plus salary sacrifice) is $32,500 for 2026–27. If you exceed this cap, you may pay extra tax on the excess at your marginal rate. Also, if your combined income and concessional contributions exceed $250,000, Division 293 tax may apply.
- Not suitable for everyone: Salary packaging is more effective for middle to high income earners with higher marginal rates. Low-income earners may not benefit because their marginal rate may be close to 15% or less.
- Need to arrange before payday: You must set up the arrangement before you earn the income. You cannot sacrifice after you've earned it.
For a detailed analysis, see our take-home pay and super and packaging page.
Tax and Medicare
For 2026–27, the resident tax brackets are: nil up to $18,200; 15% from $18,201 to $45,000; 30% from $45,001 to $135,000; 37% from $135,001 to $190,000; 45% above $190,001. Medicare levy is generally 2% of taxable income. The Medicare levy surcharge applies if you do not have private hospital cover and your income exceeds certain thresholds. The 2025–26 single reduction thresholds are used for the single reduction thresholds because the 2026–27 thresholds were not confirmed. HELP, HELP, and salary packaging are not deducted. This is an estimate, not a determination.
Disclaimer and limitations
Annual pay here is hourly rate × hours per week × 52. It assumes the same rate every week, no unpaid overtime, no penalty rates, no allowances, and no salary sacrifice. Super is estimated at 12% of ordinary earnings only, paid on top, and stops at the $270,830 maximum contribution base. Tax is the 2026–27 resident scale with the full tax-free threshold. Medicare uses the 2025–26 single reduction thresholds because the 2026–27 reduction thresholds were not confirmed here. HELP, the Medicare levy surcharge, and salary packaging are not deducted. This is an estimate, not a determination of your pay or tax.
Conclusion
Understanding your hourly rate in annual terms, with tax and super, is essential for making informed financial decisions. The **salary sacrificing into super pros and cons can help you optimise your super savings. Use our the timesheet, pay guides, reference tables, and minimum wage, casual loading, and super and packaging pages to run your own calculations.
Open the same rate on the home timesheet. Read the reference tables before treating a figure as your pay.