What Is the Difference Between Wage and Salary? A Guide to Hourly and Annual Pay
For a full-time employee working 38 hours per week, annual gross pay is hourly rate × 38 × 52, with super paid on top.
What Is the Difference Between Wage and Salary?
Understanding what is the difference between wage and salary is essential for anyone comparing job offers or planning their finances. In Australia, the terms are often used interchangeably, but they have distinct meanings under workplace law. This guide explains the key differences, how to convert between hourly and annual pay, and what casual loading and superannuation mean for your bottom line.
Wage vs Salary: The Legal Distinction
A wage is paid per hour worked. Employees on wages are typically paid for each hour they work, including overtime, penalty rates, and allowances. A salary (or annualised wage) is a fixed amount paid each pay period over a year, regardless of the exact hours worked. According to the Fair Work Ombudsman, an annualised wage can cover minimum pay rates, penalties, overtime, allowances, and annual leave loading, but it must not be less than what the employee would have earned under the award for the work performed.
Salaries are often set by employment contract and may offset award entitlements. However, employers must still meet record-keeping and pay slip obligations, including showing the annual rate of pay on pay slips. If no award or agreement applies, the salary must at least meet the National Minimum Wage and the National Employment Standards.
How to Convert Hourly to Annual Pay
The standard formula for converting an hourly rate to annual gross pay is:
Annual gross pay = hourly rate × hours per week × 52 weeks
For a full-time employee working 38 hours per week (the standard ordinary hours under many awards), the calculation is:
Annual gross pay = hourly rate × 38 × 52
For example, at the National Minimum Wage of $26.44 per hour (from 1 July 2026, as set by the Fair Work Commission), the annual gross pay would be:
$26.44 × 38 × 52 = $52,245.44
This is the amount before tax and super. If you are paid a salary, you can reverse the calculation to find your effective hourly rate: divide your annual salary by 52, then by your weekly hours.
The Fortnightly View
Many Australian employees are paid fortnightly. To find your fortnightly gross pay, simply multiply your weekly pay by 2. Using the example above, weekly pay is $1,004.90 (38 hours × $26.44), so fortnightly pay is $2,009.80. This can be useful for budgeting and comparing with job advertisements that quote fortnightly rates.
Casual Loading and Superannuation
Casual employees are entitled to a 25% loading on top of the minimum hourly rate. The casual minimum rate from 1 July 2026 is $33.05 per hour ($26.44 × 1.25). When converting a casual hourly rate to annual pay, include the loading in your calculation. However, if you are offered a salary that already includes casual loading, do not add it again. Always check your pay slip to ensure you are receiving the correct entitlements.
Superannuation is paid on top of your ordinary earnings at 12% (from 1 July 2026). It is not deducted from your pay; your employer must add it to your super fund. The super guarantee applies up to the maximum contribution base of $270,830 per year. For more details, see our guide on super and packaging.
Tax and Take-Home Pay
Your annual gross pay is not what you take home. The Australian Taxation Office applies progressive tax rates for residents in 2026–27:
- Nil on the first $18,200
- 15% on income from $18,201 to $45,000
- 30% on income from $45,001 to $135,000
- 37% on income from $135,001 to $190,000
- 45% on income above $190,000
Plus a Medicare levy of 2% (generally). Use our take-home pay tool to estimate your net pay after tax and Medicare.
When to Use Annualised Wages
Annualised wages (salaries) are common in awards and enterprise agreements. They simplify payroll by providing a fixed amount that covers multiple entitlements. However, employers must review the arrangement every 12 months (or when employment ends) to ensure the employee was not worse off. If the annualised wage is less than what the employee would have earned under the award, the employer must pay the difference.
For more information on specific award rules, see our pay guides and reference tables.
Common Questions
What is the difference between wage and salary in practice? A wage earner is paid for each hour worked, often with overtime and penalties. A salary earner receives a fixed amount per period, which may include those extras. The key is that a salary must still meet the minimum entitlements under the applicable award or agreement.
How do I know if my salary is fair? Compare your annual salary to the award rate for your classification. Use the hourly conversion tool to find your effective hourly rate. If it is below the minimum for your industry, you may be underpaid.
Does super count as part of my salary? No. Super is paid on top of your salary or wages. It is not included in your gross pay for tax purposes. Your employer must contribute 12% of your ordinary time earnings to your super fund.
Disclaimer
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.
For a personalised calculation, try the timesheet where you can enter your base hourly rate and add casual loading.
Open the same rate on the home timesheet. Read the reference tables before treating a figure as your pay.