Your quick guide to the most common super queries, by Emma Watt.
How much superannuation is payable?
At the time of writing, employers are required to pay an additional 9.5% of an employee’s ‘ordinary time earnings’ into a complying superannuation fund.
Is the minimum rate going up?
Superannuation is currently set at 9.5%, and unless the law changes, will be going up to 10% on 1 July 2021. The current plan is for minimum compulsory superannuation contributions to reach 12% by 2025.
Can the employee choose their fund?
An employee may be entitled to choose the fund into which their superannuation is deposited, provided it is a complying fund.
Where an enterprise agreement covers the employee, employees may be restricted in their ability to choose their own superannuation fund.
If an enterprise agreement names a specific fund for contributions, then it would be a breach of the agreement for the employer to remit contributions to another fund.
This is true even if the employee directs the employer in writing to remit contributions to an alternative fund.
There is currently legislation before the federal Senate that will, if passed, mandate that employees covered by enterprise agreements can choose their superannuation fund.
Can the employer choose the fund?
If an employee fails to provide their employer with the details of their chosen superannuation fund, the employer must remit contributions to a default fund. If the employee’s work is covered by a modern award, an employer’s choice of default fund is likely to be restricted to one of a handful of funds named in the award.
Do casuals get superannuation?
If a casual employee is paid more than $450 gross in a calendar month, then superannuation must be paid. Superannuation is paid on the gross figure earned for ordinary time, including the casual loading.
Do juniors get superannuation?
Any employee under 18 years old must work at least 30 hours per week to be paid superannuation. Employees who are 18-20 years old (still juniors under the Timber Industry Award 2010) are entitled to superannuation regardless of the number of hours they work per week, provided they earn at least $450 gross in a calendar month.
How often does an employer have to make contributions?
At a minimum, superannuation must be remitted to the fund at least quarterly.
Do superannuation contributions have to be shown on payslips?
Yes, superannuation contributions, and the details of the fund into which the contributions are to be paid, must be displayed on payslips.
What’s ‘ordinary time earnings’?
Anything that an employee is paid that relates to their ordinary time work is usually superable. For more information, look at Superannuation Guarantee Ruling 2009/2, which explains in detail the meaning of “ordinary time earnings’.
Superable payments include allowances, bonuses, loadings (such as loadings for ordinary time worked on weekends), paid leave and payment in lieu of notice.
Lump sum payments of leave on termination of employment, such as accrued annual leave and long service leave, are not superable. Overtime payments that are separately identified as overtime and paid at a penalty rate are not superable.
An employee who is on workers’ compensation, and is performing work, such as suitable duties, is entitled to be paid superannuation. Superannuation may be payable to an employee who is on workers’ compensation who is not working; for example, the Timber Industry Award 2010 requires superannuation to be paid for up to 52 weeks. even if the employee is absent from work for that time.
Are parental leave payments superable?
You are not required to pay superannuation on parental leave payments for which you have been paid by the government.
Are redundancy payments superable?
When an employee is made redundant, i.e. their job isn’t required any more, the National Employment Standards (and for small businesses, the Timber Industry Award 2010) require that an employer pay the employee an amount in addition to notice of termination of employment. These redundancy payments are not superable.
Can an employer offer to pay more than 9.5%?
An employer can agree to pay additional superannuation, perhaps as part of a salary arrangement. The 9.5% is a minimum, although there may be tax implications for both the employer and the employee if additional superannuation is paid.
Can employees elect to contribute extra to superannuation from pre-tax wages?
Generally speaking, yes, employees can elect to contribute additional superannuation from pre-tax wages. Again, this will have tax implications for the employee, who should seek independent advice.
Do you need to pay superannuation to contractors?
You must pay a contractor superannuation if the contract you have with them is principally for their labour. A contract is defined as being principally for labour if more than half of the dollar-value of the contract is for the contractor’s labour. This will usually be the case if:
- you pay the contractor either wholly or principally for their personal labour and skills; and
- the contractor performs the contractual work personally; and
- you are not paying the contractor to achieve a particular result, i.e. you may be paying them by the hour.
It will pay to have a close look at arrangements and potential liability with owner drivers who contract solely to one entity and are sole traders. Seek professional guidance if it is unclear.