What You Need to Know About Employee Super

Employee Super is a legal requirement for all Australian business owners to pay to their employees that are eligible. Not only do you have to consider your own retirement, but you also need to consider the retirement welfare of those you employ. This is stated under the superannuation guarantee (SG) legislation – a law that details the minimum amount of money that needs to be paid by the employer and how often it needs to be granted to employees. 

What is Superannuation and how does it work?

Superannuation is the money paid to your employees to save for their retirement funds. Super is a compulsory deed established by the Australian government to give people an additional income stream to the pension. 

Superannuation guarantee (or SG) determines the percentage of an employee’s wages that the employer is legally required to pay them. Currently, the payment includes 9.5% of their earnings paid on top of wages. 

What are the employer’s super obligations?

Every employer needs to legally follow the obligations of their employee’s super payment. This includes paying the correct amount of Superannuation to their staff, choosing a super fund to pay your employees’ Super contributions, paying and reporting electronically, paying by the deadline, and consistently record keeping. 

They must provide super, whether or not the employee:

  • Is full-time, part-time or casual
  • Receives a super pension on annuity while still working
  • Is a temporary resident – these individuals can claim the payments you made through a ‘departing Australia superannuation payment’ when they leave the country
  • Is a company director
  • Is a family member working in your business (assuming they are eligible for super guarantee).

Super payment is not required for:

  • Non-resident employees working for you outside of Australia
  • Foreign executives holding certain visas or entry permits
  • Employees paid under the Community Development Employment Program 
  • Employees temporarily working in Australia who are covered by a bilateral super agreement. Employers must keep a copy of the employee’s certificate of coverage to support the exemption.

Some contractors will also need to be paid super depending on the nature of your working relationship and their work. You can use the ATO’s contractor tools to assist with deciding the types of contractors needing their paid super. 

How much Employee Super do I have to pay?

As mentioned earlier, employers have to pay the 9.5% superannuation rate of the employees ordinary time earnings (OTE). OTE is the amount the employee earns for their normal hours of working, consisting of their commissions, shift loading, bonuses, allowances and over-award payments. Overtime payments are not recognised as ordinary time earnings. 

Have a look at this example below:

Henry’s ordinary time earnings for the first quarter of 2021-22 (1 July – 30 September 2021) were $13,000. Thus, Henry’s employer paid his super contribution of:

$13,000 x 9.5% = $1,235

There is an extensive range of payments made for employees, such as workers compensation and reimbursement for travel costs. The ATO also provides payment guides to determine whether payments are regarded as ordinary time earnings. 

If you need some help on starting your superannuation process, check out our Australian Employee Compliance Package to make payment easy for you and your employees. Otherwise, click here for other helpful Employment Document Templates to kickstart your business. 

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When do I have to pay Employee Super?

An employer must pay super contributions from when an employee begins work. This is paid at least four times a year by the ATO’s quarterly due dates. The employee super payments can be made as frequently as needed, assuring that your total SG obligation for the quarter is paid by the dates below. 

Quarter 1 (1 July – 30 September) 

  • Payment due date: 28 October

Quarter 2 (1 October – 31 December)

  • Payment due date: 28 January

Quarter 3 (1 January – 31 March)

  • Payment due date: 28 April 

Quarter 4 (1 April – 30 June)

  • Payment due date: 28 July

When due dates occur on a weekend or public holiday, payment can be made on the next business day.

Referring to the example from above, Henry’s SG contribution of $1140 for Q1 2021 must be paid by 28 October 2021. If the contributions are not paid by the deadline, employers may be fined with the superannuation guarantee charge (SGC). 

Can my employees choose their own Superannuation fund? 

Your employees can nominate their own super fund by completing the superannuation Standard Choice form, which should be provided to them within 28 days of starting work.  

Failure to provide their own fund in time and employers are obligated to choose a MySuper option as a default fund for their employee super to be paid in. You can use the Super Fund Lookup or receive confirmation from a trustee to verify the default fund is adhering. Additionally, ensure to check the industry awards relevant to you in case you’re obliged to pay superannuation contributions into a specific fund.

Employee Super and SuperStream

Confirm that your payments are reported in conjunction with SuperStream, which is an initiative to assimilate payments. Payment is made through EFT or BPAY where Superstream locks the data in a standard format so it can be easily accessed between funds, service providers, employers, and the ATO. 

Legal Advice

It is important that employees under any company are provided with the correct super payment. At Business Kitz, FairWork requirements are taken very seriously for employees, especially those that are treated in an unfair manner financially. Essentially, employees must receive superannuation support by their employer which is stated under the Superannuation Guarantee (Administration) Act 1992 (SGAA). Employers who do not follow the proper superannuation proceedings can be charged and will be settled with legal disputes.

If you are an employee and believe you are not being paid your super correctly, our sister company, Legal Kitz can assist you. To arrange a FREE consultation with one of their highly experienced solicitors, click here today, or contact us at info@legalkitz.com.au or 1300 988 954.

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