What is the difference between wages and salary?

Wages are paid per hour worked, often with penalty rates and overtime, while a salary is a fixed annual amount divided into regular payments. Salaried employees may not receive extra pay for additional hours, but their annualised wage must still meet the minimum entitlements under the relevant award or agreement. The Fair Work Ombudsman explains that an annualised wage must be reviewed to ensure it covers at least the award minimums, including penalties and allowances.

How do I convert my hourly wage to an annual salary?

Multiply your hourly rate by the number of hours you work per week, then multiply by 52. For a standard full-time role, we assume 38 hours per week. For example, $26.44 per hour × 38 hours × 52 weeks = $52,259.36 per year. This is the gross annual amount before tax and super. If you are casual, add 25% loading first: $33.05 per hour × 38 × 52 = $65,324.80 per year.

Does casual loading affect my annual salary calculation?

Yes. Casual employees receive a 25% loading on top of the base hourly rate as compensation for not receiving paid leave. When converting to an annual figure, you should use the loaded rate. However, the loading is not considered ordinary earnings for superannuation purposes; super is calculated on the base rate. The Fair Work Commission sets the casual loading at 25% of the national minimum wage for award-free employees.

Wages vs Salary: How to Compare Hourly and Annual Pay in Australia

For a full-time employee on the National Minimum Wage of $26.44 per hour, working 38 hours a week, the annual salary equivalent is approximately $52,260 before tax and super.

Wages vs Salary: What’s the Difference?

In Australia, the terms “wages” and “salary” describe two common ways of being paid, but they come with different rules and expectations. Understanding the distinction helps you compare job offers, negotiate pay, and plan your finances.

Wages are paid based on the number of hours you actually work. You receive a set hourly rate for each hour worked, and you may also get extra pay for overtime, weekend work, or public holidays. Most employees under an award or enterprise agreement are usually paid wages. The Fair Work Commission sets the National Minimum Wage and also sets the minimum award rates for each industry.

Salary is a fixed annual amount divided into equal payments throughout the year. Salaried employees often receive the same amount each pay period even if you work more or fewer hours. Some awards and agreements allow annualised wage arrangements where the salary covers minimum pay rates, penalties, allowances, and annual leave loading. The Fair Work Ombudsman notes that an annualised wage must be reviewed to ensure it is not less than what the employee would have received under the award.

When comparing wages vs salary, the key difference is how overtime and penalty rates are handled. A salaried role may offer stability, but you might not receive extra pay for extra hours unless your contract or award says so. Always check the award that applies to your job.

Converting Hourly Pay to Annual Pay

To compare a wage offer with a salary offer, you need to convert your hourly rate to an annual figure. The standard formula is:

Hourly rate × hours per week × 52 = annual gross pay

For full-time work, we assume 38 hours per week, which is the ordinary hours under the National Employment Standards. This is the same assumption used by the Fair Work Commission for the National Minimum Wage.

Example: National Minimum Wage

From 1 July 2026, the National Minimum Wage is $26.44 per hour. For a 38-hour week:

Weekly pay: $26.44 × 38 = $1,004.90
Fortnightly pay: $1,004.90 × 2 = $2,009.80
Annual pay: $1,004.90 × 52 = $52,259.36

This is the minimum an award-free adult employee can be paid. If you are covered by an award, your minimum rate may be higher.

Casual Loading

Casual employees receive a 25% loading on top of the base rate. For the National Minimum Wage, that becomes $33.05 per hour. The annual figure for a casual working 38 hours per week would be:

$33.05 × 38 × 52 = $65,324.80

Remember: the loading is paid on top of the base rate, and super is calculated on the base rate (ordinary earnings), not the loaded amount.

Tax and Superannuation

Once you have your annual gross figure, you can estimate tax and super contributions.

Income Tax (2026–27)

The Australian Taxation Office uses a progressive tax scale. For residents:

$0 – $18,200: nil
$18,201 – $45,000: 15% on the excess over $18,200
$45,001 – $135,000: $4,270 plus 30% on the excess over $45,000
$135,001 – $190,000: $31,270 plus 37% on the excess over $135,000
$190,001 and above: $47,270 plus 45% on the excess over $190,000

Medicare levy generally 2% of taxable income. The 2025–26 single reduction thresholds are used here for the reduction thresholds not confirmed for 2026–27. Use the [take-home pay tool for a more accurate estimate.

Super Guarantee

Employers must pay superannuation at 12% of ordinary earnings (from 1 July 2026) on top of your gross pay. This is paid on top of your salary or wage, not deducted from your pay. The maximum contribution base is $270,830 per year. For a $52,260 annual wage, super would be $6,271.20 per year (12% of $52,260.

Using the reference tables for more details.

Award Rates vs National Minimum Wage

If you are covered by an award, your minimum hourly rate is likely higher than the National Minimum Wage. The Fair Work Ombudsman provides pay guides for each award. For example, the average full-time adult ordinary time earnings from the Australian Bureau of Statistics (ABS) for May 2026) were $2,083.70 per week. That equates to about $108,352 per year for a 38-hour week. That is much higher than the minimum.

When comparing wages vs salary, always check the award rate for your classification. If you are award-free, the National Minimum Wage is the floor.

Fortnightly Pay

A fortnight is two weeks. If your weekly pay is $1,004.90, your fortnightly is $2,009.80. Many employees are paid fortnightly. This can help you budget. Use the the timesheet to calculate your own.

Super and Packaging

Super is paid on top of your ordinary earnings, not deducted from your salary. This is important when comparing wages vs salary because a salary offer may quote a total package including super. Always ask if the figure is base salary or total package.

Summary

Understanding wages vs salary helps you make informed decisions. Use the formula hourly × hours × 52 to compare offers. Remember the 38-hour week assumption, casual loading, tax, and super. For precise figures, refer to the Fair Work Ombudsman’s Pay and Conditions Tool and the ATO’s tax tables.

Check the minimum wage page for current rates and the take-home pay tool for after-tax estimates.