Superannuation is a government mandated means of ensuring employees put aside money for their retirement. It is compulsory for employers to comply with Australian superannuation laws.
The amounts that employers are obliged to contribute to each of their employees’ superannuation funds varies. Australian law set out the amounts (if any) that employers are required to contribute into their employees’ superannuation funds. These amounts are calculated as a percentage of the relevant employee’s ordinary time earnings. At present, the prescribed guarantee charge is 9% of the employee’s ordinary time earnings and is payable at least quarterly. The Federal Government has passed legislation increasing the prescribed guarantee charge from 9% to 12% by 1 July 2019.
For those employees governed by awards, the award itself may mandate the percentage of salary to be paid to the employee in superannuation. You should go to the Fair Work Commission or Fair Work Ombudsman websites (http://www.fwc.gov.au or http://www.fairwork.gov.au) for further information.
An employer must allow each employee to nominate the fund into which his or her superannuation guarantee charge is contributed. An employee is allowed to change their nominated fund at least annually. If an employee doesn’t nominate a preferred fund, the employer may contribute the funds into a default fund.
Employers must keep a record of all superannuation payments made to employees. These records must include the amounts paid, how they were calculated (i.e. calculation formula) and whether a choice of superannuation fund was offered.
Contributing to superannuation is not optional, it is a legal requirement. If you are seeking guidance on your super fund, speak with an business lawyer today.