The Super Guarantee for the 2023/2024 financial year has increased to 11% of earnings. This is in line with the Federal Government’s amendment to the Superannuation Guarantee (Administration) Act 1992 requiring employers to increase employee superannuation contributions by 0.5% each year. The rate is expected to peak at 12% by July 2025.
How does this affect salaries or wages?
Superannuation increases may affect employees differently depending on how their salary or wages are paid in accordance with their employment contracts. For employees who are paid in accordance with a Modern Award or Enterprise Bargaining Agreement, superannuation is usually paid on a ‘plus superannuation’ basis.
Construction of the employment contract is key. If an employment contract states “plus superannuation” an employee’s take-home wage or salary will remain unaffected and the employee’s superannuation contribution will increase in accordance with the legislated increases.
If an employment contract states “inclusive of superannuation” the employee’s wages or salary will absorb the legislated superannuation increases. It means that employees will take home less with each increase in the Super Guarantee.
This does not mean employers can draft an employment contract where the employee is paid the minimum under a Modern Award inclusive of superannuation to avoid paying the employee less wages. Such a term may be illegal or in breach of the minimum terms prescribed by the Modern Award.
It is important to be transparent with employees about how increases in the Super Guarantee may affect their wages or salary. A salary inclusive of superannuation may demotivate employees as they will receive less renumeration in hand if their wages or salaries are not increased to accommodate for legislative increases.
Want to find out more on the superannuation increase?
Contact our team who can assist you with any employment law issues you may have. Our team have assisted thousands of employers and employees for almost 30 years through employment contracts, legislation changes and general employment law.
The information provided in this article is for general information and educative purposes in summary form on legal topics which is current at the time it is published. The content does not constitute legal advice or recommendations and should not be relied upon as such. Whilst every care has been taken in the preparation of this article, FC Lawyers cannot accept responsibility for any errors, including those caused by negligence, in the material. We make no representations, statements or warranties about the accuracy or completeness of the information and you should not rely on it. You are advised to make your own independent inquiries regarding the accuracy of any information provided on this website. FC Lawyers does not guarantee, and accepts no legal responsibility whatsoever arising from or in connection to the accuracy, reliability, currency, correctness or completeness of any material contained in this article. Links to third party websites or articles does not constitute any endorsement or approval of those sites or the owners of those sites. Nothing in this article should be construed as granting any licence or right for you to use that content. You should consult the third party’s terms and conditions of use in relation to any third-party content. FC Lawyers disclaims all responsibility and all liability (including liability for negligence) for all expenses, losses, damages and costs you might incur as a result of the information being inaccurate or incomplete in any way. Appropriate legal advice should always be obtained in actual situations.
Prefer to get in touch?
With offices in Brisbane, Sunshine Coast and Sydney, our team is well equipped to provide both advice and support across a broad range of legal areas.