Increase in Superannuation Guarantee
As we discussed in our article last year, significant superannuation reforms were announced in 2021, some of which are set to come into effect from 1 July 2022.
Importantly, the superannuation guarantee (SG) contribution that employers are required by law to pay will increase to 10.5% of a worker’s ordinary time earnings, up from the current 10%.
SG contributions will also increase by 0.5% each year until it hits 12% in 2025.
Australian employers should be aware that these increases will increase the employment costs of employees paid by the hour, as well as salaried employees whose salaries are exclusive of superannuation.
Where employee salaries are inclusive of superannuation, increases may be able to be absorbed into their salary package (with a corresponding decrease to base salary) provided that their employment contract allows for this and the adjustment to their base salary doesn’t take them below applicable minimum rates of pay.
Removal of the $450 monthly SG threshold
Another major change commencing 1 July 2022 is the abolition of the $450 monthly minimum wage threshold to qualify for employer SG contributions.
This means employers will now need to make SG contributions for all their employees (including casual and part-time employees) regardless of how much they are earning. The only exception is employees under the age of 18 who must work more than 30 hours a week to be eligible for superannuation contributions, irrespective of what they earn.
Finally, employers should bear in mind that on 1 November 2021, the federal government introduced the concept of “stapled funds” for employees who do not nominate a superannuation fund when starting new employment. See our previous article here for more information.
If you have any questions regarding these changes or your superannuation obligations, please contact us at email@example.com.