Understand salary and benefits for your small business

Remuneration is generally understood to be the payment of wages or salary, plus benefits, to an employee for work performed. It can also be used as a tool to attract and retain employees.

There are  a number of other elements that form the base rate of pay such as overtime rates, superannuation and tax.  There can also be additional elements above these base requirements. This can include additional leave and allowances, assessing annual salary reviews and timing of payments.

It is important to clearly define all these elements of your business’  salary and benefits. They need to be relevant to your business and if possible unique, to help you stand out as an employer of choice. 

Following is an overview of what to consider when it comes to determining how your business will pay its employees and how to attract the best people and retain them.


The salary that you pay someone needs to take into consideration the type of work that an individual will be performing and also the level of experience and qualifications they will be required to have.

It is a good idea to check industry salary guides (eg. the Hays Salary Guide) and also compare the role to other vacancies in the market to ensure you the salary that you are offering is comparable.  

Penalty and overtime rates

Depending on the type of position, employees might be entitled to penalty and overtime rates in line with an applicable award. Such rates usually apply when an employee goes over a certain number of hours a day or a pay cycle. It can also apply when work is performed at a certain time of day.


Positions that are in line with an applicable award will often have a range of allowances that are required to be paid. These can include holding a qualification, being a designated first aid officer, cleaning of uniform or for maintaining plant and equipment.


As determined by the Superannuation Guarantee (Administration) Act 1992, employers are required to make payments on behalf of employees to their nominated superannuation fund and should be paid at a minimum of 9.5%. Some employers may choose to offer more.


If you are an employer, you may have a payroll tax obligation as determined by the Australian Taxation Office (ATO). Payroll tax is a state and territory tax on the wages you pay as an employer. It’s calculated on the amount of wages paid each month and payable in the state or territory of Australia where the services were performed.

An employee will be required to complete a Tax File Number Declaration on commencement to outline certain information which determines how much tax to be withheld.

Salary Reviews

It is important to consider how you will consistently and fairly assess annual salary reviews to determine if an increase or bonus will be paid. 

In addition you will need to consider if everyone will receive increase at the same time or on their anniversary.

To ensure that you are offering competitive salaries you might like to consider what additional salary and benefits you might like to offer employees.

Following is an overview is what to consider on top of the base salary and benefits to offer to employees.

Additional Allowances

Some employers will offer a range of allowances to non award employees. These can include an allowance for working from a home office, a contribution towards health insurance or mobile phone if a personal phone is used.

Leave Entitlements 

In addition to normal entitlements, businesses are now beginning to go above and beyond by offering more variety in the types of leave that can be taken. This includes offering such leave as study leave, birthday leave, and even pet leave. 

Other businesses are often choosing to offer a higher entitlement, such as the ability to earn an additional week of leave after five years service. 

Salary Sacrifice 

This is an arrangement with your employee to forego part of their salary in return for providing benefits of a similar value. This could be additional superannuation or taxation contributions or a range of fringe benefits.


It is beneficial to define if you are offering your employees and potential employees the base salary and benefits or if you are adding additional elements.

Need further assistance with your company’s remuneration or Human Resources strategy?  Contact Small Business Society.

The information provided in this document is for your guidance only and is general in nature. It does not constitute as legal advice. It is the responsibility of the individual to seek legal advice where required.

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About Kate Tongue

Kate Tongue is the founding Director of Small Business Society.

She is a qualified and experienced Human Resources professional with more than 10 years of experience across the private and public sectors.

Her particular interest and experience is in managing the employee life cycle, delivering process improvements, and Human Resource strategy.

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