In June 2021, the Senate passed three bills which will introduce a raft of reforms to Australia’s superannuation rules.
What are the changes?
In addition to reforms around comparing funds, managing underperforming funds and self-managed funds, the key changes that will impact businesses and employees are:
- From 1 July 2021, minimum superannuation contributions will increase from 9.5% to 10%; and
- From 1 November 2021, if a new employee doesn’t nominate a superannuation fund, employers must locate and make contributions to the employee’s ‘stapled’ fund from 1 November 2021 (instead of a nominated default fund). This reform is designed to reduce the number of employees who have multiple superannuation funds by putting the onus on employers to locate the employee’s ‘stapled’ fund.
Can employers pass on the cost of the super increase to employees?
Yes, in some circumstances. It depends whether the employee’s contract of employment provides for payment of a total package which is inclusive of superannuation or a base salary plus superannuation.
For contracts with a total package inclusive of superannuation, employers can lawfully reduce the employee’s take home pay equivalent to increase provided that the employee must not be paid below the minimum wage set out in an applicable modern award, enterprise agreement or the national employment standards.
If an employee’s contract states that they will be paid a base salary plus superannuation, an employer will generally not be able to decrease the employee’s base salary or they risk breaching the employment contract.
What do employers need to do?
To make sure that your business is prepared for the changes, you should:
- Review your current pay structures
- If you are considering reducing your employees’ take home pay, seek advice and have a plan in place for how you will communicate this to your staff
- Update your onboarding process to include identifying new employees’ ‘stapled’ superannuation funds
If you require assistance in relation to any of the information provided above, Pragma’s specialist employment lawyers can provide advice to you and your business to minimise your future risk.
Contact us today by clicking here or call us on (08) 6188 3340.