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Last Updated June 21, 2021

Understand salary and benefits for your small business

Have you ever stopped to consider your business’ salary and benefits and what to include when determining what your business will pay its employees? 

Did you know that what you pay your employees can be used to attract the best people and retain them?

When defining your business’ salary and benefits it is important to consider the many elements that make up an employee’s remuneration; including base entitlements and additional benefits.

Remuneration is generally understood to be the payment of wages or salary. The base rate of pay also includes superannuation and tax. Positions which are covered by an industry specific award may have additional base requirements including penalty and overtime rates as well as specific allowances.

There can also be additional remuneration elements above the base requirements. This can include additional leave, subsidies, and discounts. It is also beneficial to consider assessing annual salary review processes and timing of payments.

It is important to clearly define all elements of your business’ salary and benefits. They need to be relevant to your business or industry and if possible unique. What you offer above the base requirements is something that you can promote to employees and potential candidates and 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.

Salary – 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.

To assess the rate of pay you are offering, 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 and competitive.  

Superannuation – 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.

The minimum percentage employers are required to pay is set to increase over time, with the next increase to 10% due on July 1, 2021. This has not yet been confirmed, but should be considered and is set to increase by 0.5% a year before reaching a final value of 12% by 2025.

Generally, superannuation contributions must be paid for an employee aged 18 or over who earns $450 or more (before tax) per calendar month and an employee under age 18 working over 30 hours per week, who earns $450 or more (before tax) a calendar month.

Tax – As 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 is 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. During the course of their employment, an employee may amend their tax instructions should their circumstances change due to age, primary place of employment, tax free thresholds, additional contributions and HELP/HECS repayments commencing or ceasing.

Penalty and overtime rates – Awards Only – 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.

Allowances – Awards Only – 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.

Additional Subsidies – Some employers will offer a range of subsidies to non award employees. These can include remuneration 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 for study, birthday, christmas shopping, moving house or 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. 

Discounts – Employers may have access to discounts with third party providers which they are able to pass onto their employees. These may include local restaurants, theatre tickets, gym memberships, or insurances.

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 such as novated car leasing or childcare subsidies.

Just as important as what salary and benefits you offer your employees is the process that you will follow when determining salary reviews. Therefore you should 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 an 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.


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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