As an employer, it is vital that you understand your obligations relating to minimum wage and superannuation entitlements. If you do not meet these minimum obligations, you are at risk of receiving hefty penalties and having to back-pay these entitlements. This article will examine these obligations and entitlements, serving as a useful reference guide for you.

Does Minimum Wage Include Superannuation?

Minimum wage does not include superannuation. Neither the national minimum wage nor award minimum wages include superannuation. As such, it is important to understand your obligations to employees in relation to both super and minimum wages.  

What Is a Minimum Wage?

A minimum wage is the lowest wage that you can pay your employees, as permitted by the law. You cannot pay your employees less than this wage, even if you and your employee agree to it. The minimum wage acts as a safety net for your employees.

Your employees minimum wage is dependent on whether they are covered by an award or enterprise agreement. If they are under an enterprise agreement, their base rate of pay cannot be less than the base rate of pay the employee would have received under the relevant award. You can find the list of awards on the Fair Work Commission’s website. If an award or agreement does not cover your employees, they will be considered Award/Agreement free and must be paid in accordance with the national minimum wage.

For example, the national minimum wage is currently $19.84 per hour or $753.80 per week (before tax). If you hire casual workers covered under the national minimum wage, they receive at least a 25% loading on it.

These rules are governed through a number of different legal instruments. The Fair Work Act 2009 (Cth) (and its regulations) set out a national framework of obligations for businesses. Other standards include the national employment standards (NES). These rules protect your employees from exploitation and ensure fair competition in our business environment.  

What is Superannuation?

Superannuation is the contribution of a percentage of personal income that employers pay into their employees to help them save for retirement. This is called the Superannuation Guarantee. Currently, as an employer in Australia, you must pay 9.5% of an employee’s ordinary time earnings (OTE) in a nominated super fund.

OTE is how much your employee earns from their ordinary hours of work. This can include: 

  • commissions;
  • loadings; and
  • allowances.

It does not include overtime payments.

If your employee earns at least $450 (before tax) in a calendar month, you must pay them superannuation. However, it is important to always check the relevant award. Additionally, if your employee is under 18 or is a private or domestic worker, they must work at least 30 hours per week to qualify for superannuation payments. You do not need to pay superannuation to non-resident employees that do not work in Australia.

If your employee is eligible, you must make superannuation contributions to their nominated fund at least four times per year. You must pay into the fund on these quarterly due dates:

  • November 28 – Quarter One;
  • February 28 – Quarter Two;
  • May 28 – Quarter Three; and
  • August 28 – Quarter Four.

The Superannuation Guarantee (Administration) Act 1992 (Cth) sets out many of the rules relating to superannuation in Australia. This includes the current superannuation rate.

Why Are These Rules Important?

If you do not pay an employee their entitlements, you can be liable for a range of penalties and charges.

If you do not pay superannuation entitlements to your employees, they can report you to the Australian Tax Office (ATO). Upon investigation, if the ATO determines that you have not met your superannuation requirements, the ATO will engage with you to address your debt.

If you do not pay minimum wage entitlements to your employees, they can report you to the Fair Work Ombudsman (FWO) or submit an anonymous complaint on the Fair Work Commission’s website. If the FWO determines that you have not met the minimum wage requirements applicable to your employees, they can commence proceedings against you. Here, they can force you to back pay these wages and also often penalise you heavily.

As an employer in Australia, you must keep correct and accurate records of superannuation and wage payments and also provide your employees with payslips. 

Key Takeaways

The Australian minimum wage does not include superannuation. You are required to pay superannuation on top of minimum wage requirements. If you do not pay the appropriate minimum wage or superannuation requirements, you will have to back pay these entitlements and will often be liable for hefty penalties. If you have any questions about employee entitlements, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.

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