Changes to Superannuation
AWARD AND FAIR WORK ISSUES FOR SMES AND RETAIL
The superannuation payment rate increased from 10 % to 10.5%
Employers now need to make super contributions of a minimum 10.5% of Ordinary Time Earnings (OTE) paid on or after 1 July 2022. And be warned, this rate is scheduled to increase again by 0.5% p.a. over the next 3 financial years to 2025. The increases have been delayed a number of times over the years, so the current and future increase in rates probably feel quite steep.
A reminder – OTE is the amount that an employee earns for their ordinary hours of work before tax. An employee's ordinary hours are generally the normal hours they work, and for casuals, usually means the actual hours they work.
The $450 per month eligibility threshold - abolished
The minimum $450 per month income threshold has been abolished. Employers now need to pay super for all employees, regardless of how much they earn each month. Employees under 18 will still need to work more than 30 hours in a week to be eligible for super payments to be made on their behalf.
As a consequence of this change, the Fair Work Commission also removed the $350 threshold that existed in the Hospitality and Restaurant Awards.
The Gender Gap in Super
I once helped out an acquaintance who worked in his own small business during the week and performed casual seasonal work on weekends and public holidays. He worked nearly every weekend for a few different employers. When he came to retire from this work at 70, he wanted to know how much super he would have. I was saddened when, after 50 years in the same industry, the super fund informed him that his balance was a 4-figure sum. Why? Because his wages had usually been below the $450 eligibility threshold.
In the years since this occurred, I have reflected on why this story was so dismaying, and I realised that I had been harbouring an unconscious bias. This story had stuck in my mind because it was a man who experienced this. But the fact is, this story is extremely common and unremarkable for women, and I hadn’t even noticed.
I have informed myself since then about the “gender gap” in superannuation. Aside from the eligibility threshold, there are quite a few reasons why women’s super balances tend to be lower than men of the same age, including:
· working in service industries without (great) career and wage progression;
· taking career breaks in order to have children;
· paid parental leave and carer’s allowances not paying super; and
· returning to work on a casual or part-time basis in order to have the “flexibility” to continue caring responsibilities.
So it is a good thing for women that the eligibility threshold has been abolished. It will make a difference to an estimated 200,000 women. The ALP sadly dumped a policy of paying super on the Federal Government-funded paid parental leave scheme prior to the May 2022 election, so it appears this is off the table until the next election. Let us hope the gender gap doesn’t widen further before then.
A final note: some of the reasons for the gender gap apply to women who are small business owners. And we sometimes add to the problem by paying ourselves minimal super, because we want to keep the cash in our businesses. Single Touch Payroll has been good discipline in this regard – we need to report super and pay it, for our employees and ourselves, so we are now being forced to make that provision for our own futures now rather than being entirely dependent on our business asset continuing to grow. Short term pain, long term (slow but less risky) gain.
Disclaimer
The information in this post is of a general nature and is not intended to address the circumstances of any particular individual or organisation. It should not be considered or relied upon as legal advice and no liability will be accepted for any acts or omissions done in reliance upon it. Although the information provided is accurate as at the date of first posting in July 2022, it may not be accurate in the future.
