Are You Paying the Correct Superannuation to Your Employees?
As an employer, you are probably well aware you are obligated to pay the superannuation guarantee (SG) into a complying fund for your workers, as a contribution towards their retirement income.
However, you also need to ensure you’re paying the right amount of super and that it gets paid on time. Failing to get this right could lead to extra charges and fines.
How much is the SG?
The SG is the minimum you must pay, which is currently set at 9.5% of ordinary time earnings (OTE). You need to pay this for employees over 18 who earn at least $450 in OTE per calendar month, and for those under 18 who work at least 30 hours per week.
The SG must be paid to the fund at least quarterly, although you can pay more often (e.g. monthly) if you prefer.
What are ordinary time earnings?
OTE refers to an employee’s normal hours of work, whether permanent, casual or temporary. For a full-time worker, this is usually 38 hours per week. However, OTE may also include other elements as well, such as shift loadings, piece rates, allowances, bonuses, paid leave (e.g. annual, personal and long service) and annual leave loading.
You must pay the SG on all payments considered to be OTE. If an employee is on workers’ compensation payments, you will usually only need to pay the SG once they’ve returned to work. However, you should check the Award the worker is under to make sure.
What isn’t OTE?
Certain types of payments are not considered OTE, so you won’t need to pay the SG on them. These include overtime hours, workers compensation when not working (usually), parental leave, jury duty, and unused leave at termination.
As well as checking what you need to pay with the ATO, you should look at the Award the employee is under to make sure you are compliant with both. This is because there are specific conditions to meet under some Awards.
For example, workers under certain Awards are entitled to the SG at lower earnings than the $450 minimum, and to super while on workers compensation but unable to work due to their injury.
Are there any maximums?
While the SG stipulates the minimum you must pay, you can pay a higher percentage into a fund for your workers if you wish. There is a maximum level or ‘contributions cap’ which applies to higher income earners. This amount changes annually – you can find out more on this from the ATO website.
What other conditions apply?
There are a few other conditions that may apply to you. For example, you may need to pay the SG for individual contractors who work for you using an ABN. This can apply where the contractor is paid mainly for their labour – whether physical, artistic, clerical or otherwise.