More than one in seven employees across Australia have been informed that their extra superannuation payments will be deducted from their wages.

This worrying figure, which occurs weeks after the superannuation guarantee (SG) increased from 9.5 to 10 percent of wages, has led to lawyers reminding Australians that most workers are legally allowed to receive an increase in super without a cut in their take-home pay.

Recently published research found that average-income workers will see their overall income rise by $233 a year if their boss pays them the super increase. However, if their take-home pay is reduced to fund the new super increase then they could potentially lose that amount each year.

The 13 percent of Australian workers who will have to take a pay cut is probably just the tip of the iceberg. According to a survey of 838 respondents. More than four in ten employees (43 percent) have admitted that they did not know whether their employer would cut their wages to make up for the higher SG.

There appears to be a lack of understanding among employees about this superannuation related issue. Around four in 10 employees admitted that they were either unaware of the SG changes being introduced on 1st July 2021 or they knew there were aware of the changes coming but they didn’t know what the changes were about.

This illustrates that there is a huge gap in knowledge, particularly among younger employees, with 30 percent of those under the age of 40 saying that they were completely unaware of the changes.

The research illustrates that there appears to be a huge lack of communication between super funds and their members and between employers and their employees regarding this issue.

Under 10 percent of the employees in the survey said that they had been given details about the superannuation changes from their employer. Only 6.9 percent said their superfund had informed them about the SG rise.

Furthermore, two-thirds of employees stated in the survey that they had received absolutely no information from their employers in regards to the changes.

Employees across Australia are being encouraged to check their payslip to see if the extra contributions are coming at the expense of their take-home pay.

Most workers are entitled to receive the extra payments without a commensurate pay cut. However, it would depend on the nature of the employment. It is therefore important for workers to check their contract.

For employees who are on industrial awards, the increase in super will lead to a rise in total remuneration.

For employees on enterprise agreements, most of those will be similar to awards and the SG rise will be required to be paid by the employer.

This means that the take-home pay of workers on awards and enterprise agreements will remain the same but their super payments will increase.

This becomes more difficult as there is a growing number of Australian workers on individual contracts. The number of Australians on individual contracts made up close to 37 percent of the Australian workforce in May 2018.

Once the preserve of the highly paid, such contracts are spreading throughout the Australia workforce. Many of these contracts will outline that an employee will be paid a total remuneration package inclusive of superannuation.

People who are on these types of contracts must read the small print. If your contract says they will be paid $80,000 inclusive of 9.5 superannuation, then their boss’s request that they pay the SG increase out of their salary might be legal.

However, if the employee’s contract says you will earn $80,000 inclusive of the superannuation guarantee that may be amended from time to time, then your employer will have to absorb the rise.

If you are unsure of your rights, it is suggested you call a union. If that option is unavailable you could consider approaching an employment or industrial lawyer, but this option will cost you money out of your own pocket.

As for your SG payments, you should check with your super fund to see if they have gone up.

It is important to be aware that most companies pay superannuation entitlements on a monthly or quarterly basis, so checking your super balance directly will not automatically inform you if you are being paid more super.

Neither will your super fund be able to tell you your rights, as they will not know your specific employment arrangements.

The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 07 36086800. 

The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 1300 1 VAULT (1300 182 858)

Post Author: Craig Dangar

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