Employee Entitlements Definitions

Definitions provided on this page include:


A salary is a fixed sum of remuneration paid to the employee, irrespective of the hours they work. If a salaried employee works more or less hours in a month they will be paid the same.


A wage is form of remuneration whereby the employee is paid according to the hours they work. The employee receives an amount of pay per hour. If the employer works more hours they are paid more, and if they work less hours, they are paid less.


Casual is a type of employment whereby the employee has no fixed hours. There is also no minimum hours either. This type of employment is greatly favoured by employers as it gives them great flexibility to pay employees if there is work, and to send them home without pay if there is no work. In Australia, employers are not required to pay casual employees any sick pay or holiday pay.

In compensation for the absence of sick pay and holiday pay, Australian employers are required to give casual employees a greater hourly rate of pay. The default loading is 20%. This means if a standard rate of pay for a worker who has a permanent job with guaranteed hours, sick pay and holiday pay was $20 per hour, then a casual doing the same job would be paid $24 per hour ($20 plus 20%).

Penalty Rates

A penalty rate is a rate of pay that is higher the normal rate of pay to compensate a worker for work done outside usual hours. Penalty rates are commonly paid for work performed on public holidays, weekends and during the night. Penalty rates are also paid when a worker works overtime (extra hours of work that makes the working day longer).

Pay Deductions

A deduction is any amount of money which is deducted (taken away) from an employees gross pay. The amount of pay that the employees actually received in the hand after all deductions have been taken out is their net pay.

Deductions most usually include tax, that is the employer deducts from the employees pay the amount of personal income tax that must be paid to the tax office. This is a deduction over which the employee has no choice.

Other deductions are generally voluntary, that is the employee asks the employer to make the deduction. This helps employees manage their finances. Typical voluntary deductions include payments for Health Funds and also voluntary contributions to Superannuation Schemes.

Family Tax Benefit

Family Tax Benefit (FTB) is a reduction in personal Income Tax that assists persons who have a family. The amount of the reduction in personal Income Tax will be set according to the number of dependent children of the person.

Leave Loading

Leave loading is a benefit provided to an employee which was introduced in the 1970's. In Australia, it generally means that the employee is paid an extra 17.5% on top of the normal wage/salary when they are on leave. Whether an employee received this benefit depends on whether the employee is working under an award or certified agreement which stipulates that employers must pay leave loading (www.workplaceinfo.com)

Fringe Benefits

A Fringe Benefit is a remuneration provided to an employee by their employer that is not paid in money i.e. salary or wages. A typical example of a Fringe Benefit is a vehicle that is owned by the employer but is used by an employee for their private as well as business purposes. Other examples of Fringe Benefits include:


Superannuation is the term given to a method for accumulating funds for a person' retirement. In Australia it is law (Superannuation Guarantee (Administration) Act 1992), it is compulsory for all employers to make contribution to the employee's superannuation scheme. The minimum contribution, with a few exceptions, that an employer must make is 9% of the employees gross earnings. The exceptions are that if an employee earns less than $450 per month, or is aged under 18 or over 70, then the employer is not obliged to make contributions to the employee's superannuation scheme.

Tax Free Threshold

If the employee is an Australian resident for taxation purposes $6,000 of their yearly income is not taxed. This is called the tax-free threshold. They may claim the tax-free threshold from one employer only. Non-residents cannot claim the tax-free threshold. (Australia Taxation Office)

Tax Withholding

This refers to Personal Income Tax which the employer is obliged to withhold from their employee's pay, and then remit to the Australian Taxation Office on behalf of the employee. Employers must endeavour to correctly calculate the amount of Tax Withholding so that at the end of the financial year, the employee does not have a large debt when they are required to file their personal tax return.



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