Workers urged to keep eye on their pay ahead of July 1 super increase
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Workers are being warned to monitor their pay and their super accounts to make sure they receive their automatic rise in superannuation from July 1, when the rate increases from 10.5 per cent of ordinary earnings to 11 per cent.
Underpayment of super remains a huge problem, with Industry Super Australia (ISA), the umbrella group representing industry super funds, estimating workers lose an average of $4.7 billion a year.
Industry Super Australia chief executive Bernie Dean backs changes requiring employers to deposit superannuation into their employees’ accounts at the same time as they are paid.
Superannuation is required by law to be paid at least quarterly, which can result in payslips showing that super has been paid, even though it has not yet been deposited into a worker’s account.
That makes it harder for workers to track whether their super is being paid correctly. The Albanese government has flagged that it will include measures in the federal budget to be handed down on May 9 to require employers to align super with pay.
The change will take effect in three years’ time to give employers – particularly small businesses – super funds and payroll providers time to prepare.
“This is a big win for the three million mostly young and lower-paid Australians unfairly deprived of the super they’ve earned,” says Bernie Dean, chief executive of Industry Super Australia.
Low-income, casual or part-time workers should also be aware that the rule stating employers did not have to pay super to those earning less than $450 a month was removed last year.
The rules for workers under the age of 18 will remain generally the same. They will still only be eligible for super contributions if they work more than 30 hours per week.
While most workers will see their wages unchanged as they are covered by awards and enterprise agreements, and their employers absorb the cost of higher super, some on individual contracts may see their pay fall.
These mostly white-collar professionals who do not work under awards or enterprise agreements can have employment contracts that allow for their pay to be reduced to pay for the increase in the super guarantee.
Workers lose an average of $4.7 billion a year in unpaid super.Credit: Alamy
Mercer conducted a survey in early 2022 of almost 120 organisations across Australia, varying in size and industry, asking them what they were planning to do when the super guarantee rose 0.5 per cent on July 1 of that year.
For employees receiving the super guarantee minimum only – some pay more – 8 per cent said they planned to have their employees fund the full additional super by having their pay reduced.
Patrick Turner, a senior associate who specialises in employment industrial law at Maurice Blackburn, says whether an employee will have their pay reduced depends on the terms of their contract.
“If your contract says that you are paid a certain amount that is inclusive of superannuation, as varied from time to time, then subject to whatever else the contract says and whether the pay otherwise meets legal minimums, an employer may be able to have the employee absorb the increase,” he says.
Turner says that for employees facing a hit to their pay, they could seek to vary the contract so that the super increase is paid in addition to salary, as super is legislated to keep rising until it reaches 12 per cent by the middle of 2025.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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