Do Board Members Get Paid In Australia?

Appointing a board is a big milestone for any growing company or not‑for‑profit (NFP). One of the first questions we hear is simple but important: do board members get paid in Australia?

There isn’t a one‑size‑fits‑all answer. Whether you pay directors (and how you pay them) depends on your structure, your constitution, relevant laws and - especially for charities - funding and governance rules.

In this guide, we’ll walk through when board members are typically paid, common fee ranges, the key legal rules (including the Corporations Act requirements and related‑party approval rules), and practical options like fees, salaries or equity. By the end, you’ll know what’s allowed, what’s common, and how to set up compliant arrangements that fit your organisation.

What Is A Board Member In Australia?

In most Australian organisations, “board member” refers to a company director, or a committee member of an incorporated association or registered charity. These people oversee strategy and governance - they aren’t day‑to‑day staff.

For companies, director duties and governance rules live in the Corporations Act 2001 (Cth). For NFPs and associations, state and territory legislation and (for registered charities) the ACNC Governance Standards also apply. Your constitution or rules will sit alongside those laws and set how your board operates.

It depends on your entity type, your governing documents and the nature of the role.

• Companies (private and public): Non‑executive directors are commonly paid an annual or meeting fee. Executive directors (for example, a Managing Director who is also the CEO) are usually paid a salary for their employee role and may also receive board fees.
• Not‑for‑profits and charities: Many boards are voluntary and unpaid, especially in smaller organisations. However, paying directors is often permitted if your Company Constitution (or association rules) allows it and any funding conditions are met. Larger NFPs sometimes pay modest fees and reimburse expenses.

The key is that any payment has to be permitted by your constitution or rules, properly approved, and compliant with the law and any funding obligations.

How Much Do Board Members Get Paid?

There’s no fixed “board salary” in Australia - fees vary by size, complexity, risk and time commitment. As a general sense of market:

• Large public companies: Non‑executive directors often receive $50,000–$150,000+ per year. Board chairs of large ASX‑listed companies can be higher due to heavier responsibility.
• Private companies and startups: Fees range from a few thousand dollars to $50,000 per year. Early‑stage startups may offer equity or options instead of cash (or as a mix) to conserve cash and align incentives.
• NFPs and charities: Many roles are unpaid. Where paid, modest annual fees or meeting fees are common (for example, $2,000–$20,000 per year, or $250–$1,000 per meeting) in larger or more complex organisations.

What Drives The Right Fee?

• Size, risk and complexity: Regulated sectors, significant budgets or rapid growth generally require more time and skill.
• Time commitment: Number of meetings, committee work (audit, risk, remuneration), ad hoc advice and stakeholder obligations.
• Sector norms: Startups often use equity or options; NFPs may lean toward expense reimbursement or modest stipends.
• Funding and charity obligations: Some grants or endorsements restrict paying directors.
• Your constitution/rules: This is your starting point - if it restricts payment, you’ll need to follow those limits or update the document.

Legal Rules You Must Follow When Paying Directors

Australian law doesn’t force you to pay directors - but if you do, there are important compliance rules to follow.

Your Constitution Or Rules

Check what your constitution (or association rules) says about director remuneration, expense reimbursement and approval processes. If it’s silent or restrictive and you wish to pay directors, you’ll likely need to update it via the correct member resolution. If you’re adopting or updating a constitution, make sure clauses on remuneration, conflicts and approvals are clear and practical.

Corporations Act - Who Approves Director Pay?

• Proprietary companies (s202A): Director remuneration is determined by the directors unless your constitution says otherwise. Many constitutions still require or recommend member involvement for transparency.
• Public companies (s202B): Remuneration of directors must be approved by shareholders by resolution in general meeting, unless your constitution sets a different mechanism that still complies with the Act.
• Termination benefits (ss200B–200J): “Benefits for loss of office” to directors or certain executives often require prior member approval and are subject to strict rules about what counts as a benefit and monetary thresholds.

Related‑Party Transactions (Chapter 2E)

Paying a director is usually a “financial benefit” to a related party. Public companies (and certain controlled entities) generally require member approval unless an exception applies (for example, “reasonable remuneration” in the circumstances). These rules can also capture payments to a director’s spouse or related entities. If you’re a public company or controlled entity, build related‑party checks into your board remuneration process.

Charities, NFPs And Funding Conditions

Registered charities must meet the ACNC Governance Standards - including managing conflicts of interest and acting in the charity’s best interests. Some endorsements (for example, certain DGR categories) and grant agreements restrict or condition paying board members. This isn’t a universal ban, but you do need to check your specific status and agreements before introducing paid fees.

Conflicts Of Interest And Process

When setting or reviewing fees, directors who have a material personal interest in the decision should follow conflict procedures - disclose interests, abstain where required and ensure decisions are made at arm’s length. A practical way to support this is adopting a clear Conflict Of Interest Policy and keeping detailed board or member minutes.

Tax, PAYG And Superannuation

Director fees are generally subject to PAYG withholding. In many cases, superannuation guarantee also applies to director fees because directors are treated as “employees” for SG purposes. Salaries paid to executive directors will also attract PAYG and super obligations, and you may have payroll tax and workers compensation obligations depending on your state/territory and thresholds. It’s wise to coordinate with your accountant or payroll provider before payments begin so you’re set up correctly.

Documentation And Records

Always document the decision‑making. Keep copies of constitutions or rules, board/members’ resolutions, service or employment agreements, fee schedules and expense policies. Good paperwork is your best compliance defence.

Fees, Salary Or Equity - What’s Appropriate?

The “right” structure depends on your organisation and the director’s role.

Non‑Executive Directors (Advisory)

• Typical approach: Annual or meeting fees, plus reimbursement of reasonable expenses.
• Paperwork: A tailored Directors Service Agreement that covers duties, term, confidentiality, conflicts, remuneration, indemnity and termination.

Executive Directors (Management + Board Seat)

• Typical approach: An employee salary package for the operational role, with board fees only if appropriate.
• Paperwork: A clear Employment Contract for the day‑to‑day role, plus a board appointment letter or service agreement clarifying board duties and any additional remuneration.

Startups: Equity And Options

• Equity or options: Early‑stage companies often use equity to align incentives and conserve cash. Consider an Employee Share Option Plan or a bespoke options grant.
• Clarity matters: Spell out vesting, performance conditions and leaver scenarios. This is especially important where board roles evolve as the company grows.
• Further reading: Our overview of employee share options explains common structures, tax timing and key commercial terms.
• Advisory or “sweat” arrangements: For limited cash, a documented Sweat Equity Agreement can set out contributions, deliverables, vesting and IP ownership.

Whichever approach you choose, make sure your constitution permits it and that you obtain any required member approvals before issuing equity or changing remuneration pools.

Reimbursing Expenses And Good Governance

Even where directors are unpaid, it’s standard practice to reimburse reasonable, documented out‑of‑pocket expenses (for example, travel to meetings, accommodation or materials). Your constitution or policy should say what’s covered, who authorises it and the process for receipts and approvals. Document approvals in minutes.

If your board remains voluntary, consider setting out expectations in a lightweight board appointment letter and ensure you can still onboard the right people without creating financial barriers to participation.

Pros, Cons And Common Mistakes

Why Pay Your Board?

• Attract and retain experienced directors with the skills your organisation needs.
• Recognise time and responsibility, which supports accountability and performance.
• Improve diversity by removing financial barriers to serve on a board.

Potential Downsides

• Budget impact - especially for smaller NFPs and early‑stage startups.
• Perception issues with donors or members if not well communicated and justified.
• Extra compliance steps (member approvals, related‑party checks, PAYG and super).

Common Mistakes To Avoid

• Paying directors without authority in your constitution or without required member approval.
• Skipping related‑party analysis for public companies or controlled entities (Chapter 2E).
• Overlooking PAYG withholding and superannuation on director fees.
• Letting interested directors vote on their own fee without managing conflicts.
• Breaching funding or charity conditions by introducing board fees without checking eligibility.
• Not documenting agreements, resolutions, expense policies and minutes.

Key Takeaways

• Board payments are common in companies and less common (but often permitted) in NFPs - the starting point is always your constitution or rules.
• For companies, s202A and s202B govern who approves pay, ss200B–200J cover termination benefits, and Chapter 2E related‑party rules can require member approval (especially for public companies).
• Director fees generally attract PAYG withholding and often superannuation; salaries for executive directors bring full employer obligations.
• Choose a payment structure that fits the role: fees for non‑executives, salaries for executives, and equity/options for startups - all documented in the right agreements.
• Support transparency with clear policies, conflict procedures, member approvals and thorough minutes.
• If you receive grants or have charity/DGR endorsements, check your specific conditions before paying directors.

If you’d like a consultation on board member remuneration and compliance for your company or not‑for‑profit, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.