Earning Money - Wages and Salaries
Understand how Australians are paid for their work. Calculate earnings from hourly wages and annual salaries, and learn to read a real pay slip.
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Worksheet
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Q1 · How do you calculate total pay for someone who works a fixed number of hours at an hourly rate?
Q2 · Do you think a salary always pays more than a wage? Why or why not?
Learning Intentions
Know
- The difference between wages and salaries.
- The key components of an Australian pay slip.
Understand
- How hourly rates and hours worked determine total pay.
- How an annual salary is distributed across pay periods.
Can Do
- Calculate total earnings from an hourly rate and hours worked.
- Calculate portions of an annual salary (weekly, fortnightly, monthly).
Success Criteria
- I can calculate total pay using $\text{Pay} = \text{hours} \times \text{hourly rate}$.
- I can convert an annual salary into weekly, fortnightly or monthly amounts.
- I can identify gross pay, net pay and deductions on a standard Australian pay slip.
Key Terms
Common Mistakes to Avoid
Wrong: “A salary always means you earn more than a wage.” The payment structure (fixed vs hourly) does not determine the total amount. A high hourly wage can exceed a low salary.
Right: Wages and salaries are different payment structures, not different pay levels. What matters is the total annual equivalent.
Wrong: “To find a fortnightly salary, divide by 12 and then by 2.” There are 26 fortnights in a year, not 24.
Right: Divide an annual salary by 52 for weekly, by 26 for fortnightly, or by 12 for monthly. Always use the correct number of pay periods.
Most Australians are paid either a wage or a salary. The structure affects how you calculate earnings and how your pay changes with extra hours.
A wage is paid based on the number of hours you work. The formula is straightforward:
If you work more hours, you earn more. If you work fewer hours, you earn less. Wages are common in retail, hospitality, construction and casual work.
A salary is a fixed annual amount agreed in your employment contract. It is paid in equal instalments regardless of exact hours worked:
Real-World Anchor: As of 2025, the Australian national minimum wage is $24.10 per hour (or $915.90 per week for a full-time 38-hour week). Many workers are covered by awards set by the Fair Work Commission, which specify minimum rates for different industries.
Important: A salary does not automatically mean higher pay. A full-time retail worker on $28/hour earns approximately $55,300 per year ($28 \times 38 \times 52). An office worker on a $52,000 salary earns less despite being on a “salary.” Always compare annual equivalents.
What to write in your book
- Wages are calculated using hours worked × hourly rate.
- A salary is a fixed annual amount paid in regular instalments regardless of hours.
- Convert a salary by dividing by 52 (weekly), 26 (fortnightly) or 12 (monthly).
- Compare annual equivalents to judge which pay structure is better.
Every Australian employer must provide a pay slip within one day of paying an employee. By law, it must show:
- The employer’s and employee’s names
- The pay period dates
- Hours worked and the hourly rate (for wage earners)
- Gross pay - total before deductions
- All deductions (PAYG tax, Medicare levy, superannuation)
- Net pay - the amount actually paid
- Any loadings, penalties or allowances
Scope note: This lesson focuses on reading gross and net pay. Detailed tax calculations and superannuation are covered in later financial mathematics topics.
What to write in your book
- An Australian pay slip must show gross pay, all deductions, and net pay.
- Gross pay is total earnings before tax and other deductions are taken out.
- Net pay (take-home pay) is what the worker actually receives.
- Employers must provide a pay slip within one day of paying an employee.
Interactive: Pay Calculator
Your Turn
Question 1: Chen works 22 hours this week at $29.80 per hour. Calculate Chen’s gross pay.
Question 2: Aisha has an annual salary of $68,000. Calculate her fortnightly pay before tax.
Revisit Your Thinking
Look back at your Think First response about Alex working 8 hours at $25.50 per hour. Was your answer correct? What if Alex worked a Sunday shift paid at double time ($51.00 per hour) for 6 hours instead? Which shift pays more?
Earlier you were asked: What was your first thought on this topic?
Now that you've worked through the lesson, write a fuller answer. What changed in your thinking?
Multiple Choice
Select the best answer for each question.
1 mark A casual worker earns $28.50 per hour. How much do they earn for a 7.5-hour shift?
1 mark Mia earns a salary of $78,400 per year. What is her fortnightly pay before tax?
1 mark Which of the following correctly describes a salary?
1 mark Jordan’s pay slip shows a gross pay of $1,250 and total deductions of $312.50. What is Jordan’s net pay?
1 mark An employee is paid $1,200 per week. What is their approximate annual salary?
Short Answer
Show all working and justify your answers.
Question 6
Sam works 38 hours at $32.40 per hour and an additional 4 hours of overtime at time-and-a-half. Calculate Sam’s gross pay for the week. Show all steps.
Question 7
Two job offers are available:
- Job A: Wage of $30/hour, 38 hours per week
- Job B: Salary of $62,000 per year
Calculate the annual equivalent of Job A and determine which job pays more per year. Show your reasoning.
Question 8
Explain why dividing an annual salary by 24 to find a fortnightly amount is incorrect. In your answer, state the correct method and calculate the difference this error would make for a salary of $52,000 per year.
Model Answers
Normal pay: $38 × $32.40 = $1,231.20
Overtime rate: $32.40 × 1.5 = $48.60 per hour
Overtime pay: $4 × $48.60 = $194.40
Gross pay: $1,231.20 + $194.40 = $1,425.60
Marking guidance: 1 mark for normal pay calculation, 1 mark for overtime rate and pay, 1 mark for correct total.
Job A annual: $30 × 38 × 52 = $59,280
Job B annual: $62,000
Difference: $62,000 - $59,280 = $2,720
Conclusion: Job B pays $2,720 more per year.
Marking guidance: 1 mark for Job A calculation, 1 mark for identifying Job B amount, 1 mark for correct comparison, 1 mark for clear conclusion with units.
There are 26 fortnights in a year, not 24. Dividing by 24 assumes only 48 weeks of pay, ignoring 4 weeks.
Correct fortnightly pay: $52,000 ÷ 26 = $2,000.00
Incorrect fortnightly pay: $52,000 ÷ 24 = $2,166.67
Difference per fortnight: $2,166.67 - $2,000.00 = $166.67
Annual difference: $166.67 × 26 = $4,333.42
Marking guidance: 1 mark for explaining 26 fortnights, 1 mark for correct calculation, 1 mark for incorrect calculation, 1 mark for difference, 1 mark for clear reasoning.