Basic salary vs total remuneration
Understanding the components of employee compensation helps ensure clear communication about pay and compliance with Fair Work requirements.
Basic salary
- Fixed annual/monthly amount
- Before any additions
- Core compensation
- Must meet award minimum
Total package
- Basic salary + super
- Plus any bonuses
- Plus allowances
- Complete remuneration
Components of remuneration
Total remuneration typically includes several components built on the basic salary foundation:
Remuneration breakdown
Basic salary and award compliance
For award-covered employees, the basic salary must meet the minimum hourly rate specified in their Modern Award when calculated back to an hourly figure.
Award compliance check
To verify basic salary meets award requirements: divide annual salary by 52 weeks, then by 38 hours. Compare this hourly rate to the award minimum for the employee's classification. The basic salary rate must equal or exceed the award minimum—bonuses and allowances cannot compensate for a below-award basic salary.
Common mistakes with basic salary
Confusing package with basic salary
Advertising "$70,000 including super" when the basic salary is actually $62,780. Always clarify whether figures are basic salary or total package.
Basic salary below award minimum
Setting basic salary below the award rate and relying on bonuses to make up the difference. The basic salary itself must meet the minimum.
Not updating after award reviews
Failing to increase basic salary when award minimums rise. If the basic salary falls below the new minimum, it must be increased regardless of any above-award component.
Key takeaways
Basic salary is the core fixed pay component before any additions like super, bonuses, or allowances. In Australia, it must meet the minimum rate in the applicable Modern Award. When discussing or advertising salaries, always clarify whether the figure is basic salary or total package to avoid confusion.
Ensuring basic salary compliance requires understanding award rates and tracking hours for salaried employees on annualised arrangements. RosterElf helps track hours against salary to verify employees receive at least their award entitlements.
