Have you got “the right stuff” when it comes to super?

Superannuation payments and calculations can be a tricky thing for employers, of all sizes, to get right. These challenges came to light last month when the Financial Sector Union of Australia (FSU) claimed that 7,000 part time staff did not receive their full super entitlements from the Commonwealth Bank of Australia (CBA), with claims dating as far back as 2009.  The full extent of the potential underpayment is not known, however, the FSU has said that the majority of those impacted are likely to be women and former employees of the CBA.

What is superannuation and when is it paid?

Superannuation is paid to workers to provide for their retirement.  If a worker earns $450 or more before tax in a calendar month, their employer must pay super on top of their wages into a super fund. This payment is made regardless of whether the worker is full time, part time or casual.

The minimum an employer must pay is called the superannuation guarantee.  The superannuation guarantee is currently 9.5% of an employee’s ordinary time earnings and must be paid at least four times a year.

There are some circumstances where superannuation is payable to a contractor.  Contractors may be entitled to superannuation if they are paid wholly or mostly for their labour by one principal. In these circumstances, a contractor may be considered an employee for the purposes of superannuation.

What if a mistake has been made?

If an employer finds that a worker has not been paid the correct superannuation amounts or not paid at all – the underpayment should be rectified immediately.  Rectifying the situation as soon as you become aware will minimise any further interest that may be charged by the superannuation fund for late payment.

There are serious consequences for employers not making the correct superannuation payments.  Employers who do not pay the correct superannuation can face penalties of up to 75% of the shortfall or be charged fees and interest by the ATO.  Employers may also lose their tax deduction eligibility for superannuation contributions. Importantly, if a company has not met its superannuation guarantee obligations, the director/s may become personally liable for a penalty equal to the unpaid amount. 

Under the FW Act, the failure of an employer to keep appropriate records relating to superannuation attracts civil penalties.  The current rate is up to $54,000 for corporations per breach and $10,800 for individuals per breach.

Reg 3.37 of the Fair Work Regulations 2009 (Cth) requires employers to keep records relating to:

  • The amount of the contributions made;
  • The period over which the contributions were made;
  • The date on which each contribution was made;
  • The name of any fund to which a contribution was made;
  • The basis on which the employer became liable to make the contribution, including:

    • A record of the election made by the employee as to the fund to which the contribution are to be made; and
    • The date of any relevant election.

In order to minimise claims for unpaid superannuation, it is important that a regular superannuation audit be undertaken to ensure that superannuation is being paid to all entitled employees (and maybe contractors). 


Shane Koelmeyer is a leading workplace relations lawyer and Director at Workplace Law. Workplace Law is a specialist law firm providing employers with legal advice, training and representation in all aspects of workplace relations, employment-related matters and WH&S.

02 9256 7500 | sydney@workplacelaw.com.au

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