Employers are now required to pay a superannuation guarantee to most of their workers. We set out the important changes to superannuation guarantee obligations made effective from 1 July 2022, and outline the ATO’s position on specific worker circumstances such as contractors and international workers.Emily Fyffe and Michael Wells, Maddocks
Prior to the recent changes, employers only needed to pay a superannuation guarantee (SG) to workers who were paid $450 or more (before tax) in a calendar month.
The relevant super laws previously provided that where an employee was paid salary and wages of less than $450 in a given month, those salary or wages were disregarded for the purposes of calculating the employee’s superannuation guarantee contribution. Where monthly earnings fluctuated, SG contributions were only payable for the months in which the worker earned more than the monetary threshold.
The minimum SG payable to eligible workers was 10% of the worker’s ordinary time earnings (OTE) – having risen earlier from 9.5% on 1 July 2021. A worker’s OTE is the amount that employers pay their workers for their ordinary hours of work, and includes salary and wages, shift loadings, commissions, bonuses, and some allowances.
Parliament amended the SG Act by removing the monthly minimum threshold for salary or wages to count towards the SG.
Now, an employer’s obligation to pay SG contributions to their workers arises on all OTE paid to eligible workers, irrespective of the amount the worker had been paid. This change is intended to increase access to superannuation for approximately 300,000 people, or 3 per cent of workers, who were previously not entitled to a SG by reason of the $450 threshold.
Parliament has noted this change will affect workers who are mainly young, lower-income, part-time workers – around 63 per cent of which are female.
Further, the minimum SG payable to eligible workers has increased to 10.5% of the worker’s OTE, and is scheduled to progressively increase to 12% by 2025.
Generally, all workers are now eligible to receive a SG from their employer. However, there are additional eligibility rules for certain types of workers. These additional eligibility rules must be considered by employers when engaging workers in the following contexts:
You can read earlier ClearLaw articles on a range of topics, such as:
Alisha Wright is an Associate in Maddocks’ Commercial Team.
Alisha advises extensively in a range of matters including:
Alisha has recently assisted with providing advice to SMSFs in relation to their compliance obligations and the drafting of bespoke shareholders agreements.
The legal information and commentary on this site is general only. Documents ordered through Cleardocs affect the user's legal rights and liabilities. To assess their suitability for the user, legal accounting and financial advice must be obtained.
For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of their team.