Whether you’re an employer or an employee, it’s important to know the obligations a business has when it comes to paying super, because even a small error can become a big expense.

There are a few things employers can do to help make sure they’re meeting their responsibilities.

Every employer should know they must pay super to their staff. The standard super payment is called the Superannuation Guarantee, and the amount is set by the Federal Government. Currently, it is 10.5% of ordinary time earnings (OTE for short). This is gradually rising to 12% from 1 July 2025.

Some awards also stipulate the minimum amount of super that needs to be paid. This amount may be higher, but cannot be lower, than the Super Guarantee.

However, not everything an employee earns is counted as OTE.

Payments counted towards OTE include:

• Base salary
• Allowances
• Shift loadings
• Regular annual leave
• Most bonuses

Payments not counted towards OTE include:

• Overtime
• Overtime bonuses
• Allowances for expenses
• Leave entitlement payouts
• Reimbursements

Also remember, super is compulsory. Private agreements can’t be used to get around it.

It makes sense that businesses pay their permanent full-time and part-time staff super, as well as anyone on a set-term contract. However, other employees may also be entitled to super.

It makes sense that businesses pay their permanent full-time and part-time staff super, as well as anyone on a set-term contract. However, other employees may also be entitled to super.

Casual staff

https://www.twusuper.com.au/employer-super/how-to-calculate-super/casual-employees/:

The amount of super an employer must pay a casual employee is worked out in the same way as it is for permanent staff. Before 1 July 2022 casual employees had to earn $450 a month before tax to qualify for super – this is no longer the case as the minimum earning threshold has now been abolished.

If a casual employee is under 18, they may still be entitled to super payments if they work 30 hours or more in a week. Casuals aged 18 and over don’t have to meet the 30 hour a week work requirement.

Contractors 

https://www.twusuper.com.au/employer-super/how-to-calculate-super/contractor/

Contractors may be eligible too. Many employers make the mistake of assuming that external contractors don’t get paid super. But, where a contractor is personally doing the work for a client, the ATO may deem that contractor to be an ‘employee’ under superannuation law – even if they have an ABN and are paid via invoice. This is especially the case where the contractor takes instructions from the employer (or manager) as if they were any other worker in the company.

There are strict rules on when super must be paid. Employers who pay super at the same time as their employees’ wages will almost always be in the clear, and it’s generally the easiest and most foolproof way of keeping up to date.

It is possible however, to pay superannuation quarterly, as long as it is paid in full by the due date:

Q1          July – September   –  Due on 28 October

Q2          October – December  –  Due on 28 January

Q3          January – March  –  Due on 28 April

Q4          April – June  –  Due on 28 July

If payments aren’t made in full by the due date, businesses can be handed a fine known as the Super Guarantee Charge. And unlike super, the charge is not tax deductible.

To make sure super is paid correctly, many companies use a superannuation clearing house to handle super payments on their behalf.

It is important to remember that super must be paid into a ‘complying super fund’, not to the employee personally. Complying super funds are ones that meet the ATO’s fund requirements. If you have any doubts about a fund, you can check their status online or ask them for their statement of compliance – such as TWUSUPER’s Letter of Compliance https://www.twusuper.com.au/assets/Documents/letter-of-compliance.pdf.

Super ‘stapling’ https://www.twusuper.com.au/employer-super/super-stapling/ is the system where every worker has one super fund that they keep using when they move from job to job. This system has been in place since November 2021, with the aim of preventing workers unnecessarily having multiple super accounts.
The simplest way to set up your new employee’s super remains the same: Give them a Choice of Fund form and ask them to return it to you with their choice of complying fund selected. If no Choice of Fund form is supplied, you must find the employee’s stapled fund through the ATO.

Note that an employee’s stapled fund may not be the fund that provides them with the best insurance option, as the stapled fund may not cover ‘dangerous occupations’ – most occupations in transport are classified as dangerous. TWUSUPER’s insurance has no occupational exclusions – meaning that insured members are covered no matter what job they do.

A lot of errors can be avoided by making sure your payroll software is up-to-date and suitable for your business. At the very minimum, it should be able to handle the Single Touch Payroll https://www.twusuper.com.au/employer-super/payroll/single-touch-payroll system the ATO requires all businesses to have in place.

If you’re still unsure about any of your super obligations as an employer, give your default super fund a call.

If you’re not sure who your default fund is, or want more information on the points above, TWUSUPER https://www.twusuper.com.au/employer-super/ – the industry super fund for the people who keep Australia moving – can help you out.

Claude Savino, TWUSUPER’s Account Manager for Tasmania, is ready to help. You can call him on 0400 502 583.

TWU Nominees Pty Limited ABN 67 002 835 412, AFSL 239163 (‘TWU Nominees’), is the trustee of TWU Superannuation Fund (TWUSUPER) ABN 77 343 563 307 and the issuer of interests in it. The information in this article is of a general nature only and does not take account any of your objectives, financial situation or needs.  A copy of the current TWUSUPER Product Disclosure Statement should be obtained from twusuper.com.au/pds https://www.twusuper.com.au/forms-and-resources/product-disclosure/ and considered carefully before you make any decision in connection with TWUSUPER. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at twusuper.com.au/tmd https://www.twusuper.com.au/forms-and-resources/product-disclosure/