Remuneration Per Annum: What It Means For Employers In Australia

When you’re hiring or reviewing pay, “remuneration per annum” comes up everywhere - in job ads, contracts and salary reviews. But what exactly should it include from an employer’s perspective, and how do you present it clearly so there’s no confusion later?

Getting this right matters. Clear remuneration terms help you attract talent, budget accurately, meet legal obligations and avoid pay disputes. In this guide, we’ll unpack what “remuneration per annum” means in Australia, what to include (and exclude), and how to document it properly in your contracts and policies.

We’ll also cover superannuation, bonuses, commissions, allowances and common models like fixed remuneration and total remuneration - so you can confidently set pay for your team and stay compliant.

What Is “Remuneration Per Annum”?

In plain English, “remuneration per annum” is the full amount you agree to pay someone for a year of employment. It’s broader than just base salary - it captures the total value of what you pay for their work over the year.

Depending on how you structure it, that can include base pay, superannuation, allowances, commissions, bonuses, loadings, and certain benefits. Because the term is often used differently by different employers, clarity in your documents is critical.

In Australia, many employers choose between two common ways to describe remuneration:

• Fixed Remuneration: Usually means the employee’s guaranteed components (for example, base salary plus super) - excluding variable elements like discretionary bonuses. See how this works in practice in our guide to fixed remuneration.
• Total Remuneration: Usually means the full package value including guaranteed and variable components, and may also include things like car allowances and non-cash benefits where relevant.

Neither approach is “right” or “wrong.” What matters is that you define the term in your Employment Contract so everyone knows what’s included and how it’s calculated.

What Should Be Included (And Excluded) In Remuneration Per Annum?

Every business is different, but these are the most common remuneration components and how they’re typically handled.

Base Salary (Or Wages)

This is the core, guaranteed amount paid for the role. For award or agreement-covered roles, the base must at least meet minimum rates, including any loadings and penalties where applicable. If you pay above-award wages, document how the higher rate interacts with award entitlements.

Superannuation

Most employees are entitled to super at the statutory Superannuation Guarantee rate on their ordinary time earnings (OTE). Whether your advertised or contractual “remuneration per annum” amount is inclusive or exclusive of super should be stated clearly. If you say “$90,000 per annum plus super”, it’s exclusive. If you say “$90,000 package including super”, it’s inclusive.

For a deeper dive on what counts for super, check the rules around ordinary time earnings (OTE) and how OTE determines your super obligations. You may also need to consider when to pay super on bonuses.

Bonuses And Commissions

Bonuses and commissions can be either discretionary (at your decision) or non-discretionary (entitlement-based, for example, when objective targets are met). This matters for both contractual risk and super obligations. If variable pay is part of the role, be explicit about the basis for calculation, performance periods, caps, eligibility on termination, and whether it’s discretionary or not. The distinction between discretionary vs non-discretionary payments is key to getting this right.

Allowances And Loadings

Depending on the industry and award coverage, allowances (e.g. travel, laundry, meal, tools) and loadings (e.g. annual leave loading) may apply. Say whether allowances are rolled into a higher salary or paid separately, and whether they’re part of “remuneration per annum” for headline purposes.

Paid Leave And Overtime

Annual leave, personal leave and public holidays are entitlements rather than “components” of remuneration, but they’re part of the overall value proposition. If you rely on annualised wage arrangements, ensure your annualised amount reasonably compensates for overtime and penalties, and keep the required records. If overtime is common, clarify how it’s calculated and approved.

Non-Cash Benefits And Perks

Benefits like vehicles, phone plans or professional memberships can be included in total remuneration. If you offer non-cash benefits, specify their monetary value and who owns the asset (e.g. the laptop) if employment ends. Keep Fringe Benefits Tax (FBT) considerations in mind when designing packages.

Equity And Long-Term Incentives

For senior roles or startups, equity (options, RSUs) can be part of remuneration. Equity should sit alongside cash components and be documented in a separate plan or deed. If you’re exploring options, consider a formal Employee Share Option Plan so incentives are structured and compliant.

Clarity On “Plus Super” Vs “Including Super”

Misunderstandings often arise when it’s not clear whether the headline figure is inclusive or exclusive of superannuation. A short line in the contract can prevent disputes - for example, “The Remuneration is $90,000 per annum plus the statutory Superannuation Guarantee” or “The Total Remuneration is $90,000 per annum including superannuation.” If you’re unsure how to present this, our overview on whether salaries include super is a helpful reference.

How Do You Present Remuneration In An Employment Contract?

Your contract is the single source of truth for how remuneration works. It should define the term “Remuneration” (or “Fixed Remuneration”/“Total Remuneration”) and then set out the pieces that make it up.

Key clauses to include or consider:

• Definition: A clear definition of “Remuneration per annum” and whether the figure is inclusive or exclusive of superannuation.
• Base Pay: The annual base salary and pay cycle (weekly/fortnightly/monthly).
• Superannuation: Reference to the Superannuation Guarantee and the employee’s nominated fund.
• Variable Pay: A separate bonus or commission clause for calculation rules, eligibility and discretion (if any). If commissions are central to the role, it can help to use a dedicated Employee Commission Agreement.
• Allowances: Which allowances apply, and whether they’re included in or paid on top of the base.
• Annualised Wages: If applicable, explain what is covered by the annualised amount and how you ensure compliance with minimum entitlements.
• Deductions/Set-Off: Any set-off provisions against award entitlements should be carefully drafted and compliant.
• Review: When and how remuneration is reviewed (e.g. annually, performance-based, CPI considerations).

For consistency and compliance, lock these terms into a tailored Employment Contract template for your business, then adapt for each role.

Common Remuneration Models Small Businesses Use

Different roles and industries call for different remuneration structures. Here are common approaches and when they work well.

1) Base Salary Plus Super

The simplest model for salaried roles. You state a base salary and separately pay super at the statutory rate on OTE. This is easy to communicate and budget for.

2) Fixed Remuneration Package

You advertise and contract a single annual amount that includes base pay and super (and sometimes certain fixed allowances). This makes headline figures look clear, but you’ll need to specify what’s inside the package so there’s no confusion. If you use this model, align it with the concept of fixed remuneration and keep variable pay out of the “fixed” definition.

3) Salary Plus Commission

Common for sales roles. A lower base salary is supplemented by non-discretionary commissions tied to measurable sales or revenue targets. Because commissions can affect OTE and super, make sure your commission rules are documented and workable at scale, ideally in an Employee Commission Agreement.

4) Salary Plus Discretionary Bonus

Useful for roles where outcomes aren’t easily quantifiable each month. You might offer a discretionary annual bonus based on performance and company results. Be careful with language - if you want true discretion, say so clearly and retain control over whether and how much is paid.

5) Salary With Equity

Popular with startups and growth companies. Equity aligns long-term incentives with company performance and can help manage cash burn. Use a structured plan (e.g. options with vesting schedules) and formalise it with an Employee Share Option Plan.

6) Salaried Directors

For executive-level hires, remuneration can include salary, super, STI/LTI bonuses, benefits and director-related entitlements. Make sure you understand the nuances of director fees vs employee salary and how each is taxed and documented.

Compliance Essentials: Super, OTE, Bonuses And Pay Transparency

Remuneration isn’t just a budgeting decision - there are compliance touchpoints you’ll need to meet from day one.

Superannuation And OTE

• Super Guarantee: Pay super at the statutory rate on your employee’s OTE. For the current rate and due dates, check the ATO guidance and build reminders into your payroll routine.
• OTE Scope: OTE generally covers earnings for ordinary hours, which impacts how you calculate super. If you’re unsure whether a payment type counts as OTE, revisit ordinary time earnings rules.
• Bonuses/Commissions: Some bonuses attract super and some don’t. The line often turns on whether they are truly discretionary. For specifics, see superannuation on bonuses and ensure your payroll settings match your contract language.

Awards, Minimums And Set-Offs

• Award Coverage: If a role is covered by a modern award, your remuneration must at least meet minimum rates and rules for penalties, overtime, allowances and breaks.
• Annualised Salaries: If you annualise pay to “absorb” penalties and overtime, follow record-keeping and reconciliation requirements. Use clear wording so your “all-in” approach lawfully covers those entitlements.
• Above-Award Pay: If you offer more than the award, define exactly what the higher salary covers and maintain compliance with above-award wages.

Pay Transparency And Pay Secrecy Clauses

Recent changes to the Fair Work Act restrict pay secrecy clauses. Employees can generally choose to discuss their pay. If you’re updating contracts, make sure any pay secrecy wording is removed or updated so your templates reflect current law.

Discretionary vs Non-Discretionary Payments

Label and operate your incentive schemes consistently. If your process or wording turns a “discretionary” payment into an expectation, you could create legal obligations you didn’t intend. Review your schemes against the tests in our guide to discretionary vs non-discretionary payments.

Document Everything

Clarity in contracts, policies and letters of offer makes compliance easier. Make sure remuneration definitions match payroll system settings, and that HR, finance and managers talk the same language when offering and reviewing pay.

Practical Steps To Set And Review Remuneration

Here’s a simple, employer-friendly process you can follow.

1) Define Your Remuneration Model

Decide whether you’ll use base-plus-super, fixed remuneration, or total remuneration for each role type. Keep it consistent across job ads, offers and contracts so candidates don’t get mixed messages.

2) Map The Components

List what’s in the package: base, super, allowances, commissions/bonuses, loadings, and any non-cash benefits. Identify which are guaranteed vs variable, and which count towards OTE for super purposes.

3) Draft Or Update Contracts

Update your templates so they define “Remuneration per annum” clearly and align to your model. For role-specific needs (for example, a heavy commission role), add a role annexure or use a dedicated Employee Commission Agreement. For executives, tailor clauses around incentives, restraints and notice entitlements in an executive Employment Contract if appropriate.

4) Check Super, OTE And Payroll Settings

Configure payroll to treat each pay element correctly - base, allowances, commissions and bonuses - and to calculate super accurately on OTE. Cross-check your settings against your contract wording and the guides on OTE and super on bonuses.

5) Communicate Clearly In Offers And Reviews

In offer letters and review emails, restate the remuneration model and numbers exactly as they appear in the contract (e.g. “$85,000 plus super” vs “$85,000 including super”). Confirm when changes take effect and how incentives will be assessed.

6) Review Regularly

Set an annual review cycle to ensure you remain competitive and compliant with minimums. Where you use annualised salaries to absorb entitlements, conduct the required reconciliations to ensure employees are not underpaid.

7) Keep A Clean Paper Trail

File signed contracts, incentive plans, approval emails and payroll evidence. If a question arises later about whether “remuneration per annum” included a certain benefit, you’ll be glad everything is documented.

Key Takeaways

• “Remuneration per annum” is the yearly value you pay an employee; define clearly whether it’s base only, fixed remuneration or total remuneration.
• Be explicit about whether figures are “plus super” or “including super,” and align your contract wording with payroll calculations.
• Handle bonuses, commissions and allowances carefully - the difference between discretionary and non-discretionary payments affects both obligations and super.
• Understand what counts as OTE and when to pay super on variable pay to stay compliant.
• Use clear, tailored documents - an Employment Contract, commission terms and, if relevant, an Employee Share Option Plan - so expectations are set from day one.
• Review remuneration regularly to ensure you meet minimum entitlements and remain competitive for talent.

If you’d like a consultation on structuring and documenting remuneration per annum for your team, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.