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It is important to understand the obligations you hold towards your employees regarding minimum wage and superannuation entitlements as an employer. If you fail to meet the requirements, you place your business at risk of receiving hefty penalties and may have to back-pay these entitlements. Importantly, failure to fulfil these obligations puts the reputation of your business at risk. 

This article will help you avoid making such a mistake by taking you through the minimum wage entitlements that you should know as an employer.

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Does Minimum Wage Include Superannuation?

The Fair Work Ombudsman is a national agency that sets awards outlining the national minimum wage and other minimum wage requirements in Australia. In particular, these minimum amounts do not include superannuation. As such, you must understand your obligations to employees regarding superannuation and minimum wages.  

What is Minimum Wage?

The minimum wage is the lowest wage that the law permits you to pay your employees. You cannot pay your employees less than this wage, even if they agree. Ultimately, the minimum wage acts as a safety net and protects your employees’ rights.

Furthermore, your employee’s minimum wage is dependent on whether an award or an enterprise agreement covers it. Under an enterprise agreement, your employee’s base rate of pay cannot fall under the base rate that the relevant award outlines. You can find the list of awards on the Fair Work Commission’s website. If an award does not cover them, your employees may be award or agreement free. In that case, you must pay them in accordance with the national minimum wage.

For example, from 1 July 2022, the national minimum wage is $21.38 per hour, or $812.60 per every 38 hour week (before tax). If you hire casual workers covered under the national minimum wage, they receive at least an additional 25% loading.

Several different laws govern the rules around minimum pay requirements in Australia. For example, the Fair Work Act 2009 sets out a national framework of business obligations. Other standards include the National Employment Standards (NES). These rules protect your employees from exploitation and ensure fair competition in our business environment. 

Who is Not Covered by Minimum Wage?

Additionally, some employees can legally receive less than the national minimum wage, including: 

  • workers aged 21 or under;
  • workers on the Supported Wage System; and
  • apprentices and trainees.

However, any applicable awards or enterprise agreements can still cover these employees. These awards or agreements may outline a percentage of the adult wage for anyone who falls under the definition of a young worker. 

What is Superannuation?

Superannuation is a percentage of personal income that employers pay their employees to help them save for retirement. We refer to this as the Superannuation Guarantee. Additionally, as an employer in Australia you must pay 10% of an employee’s ordinary time earnings (OTE) to a nominated super fund.

OTE is how much your employee earns from their ordinary hours of work. It includes: 

  • commissions;
  • loadings; and
  • allowances.

Importantly, OTE does not include overtime payments.

If your employee earns at least $450 (before tax) in a calendar month, you must pay them superannuation. For employees under the age of 18, you must pay them superannuation if they earn $450 or more in a month. Furthermore, you must also pay them superannuation if they work more than 30 hours per week.

Additionally, if your employee is under 18 years of age 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.

Future Superannuation Rates

The Superannuation Guarantee (Administration) Act 1992 sets out many of the rules and requirements regarding superannuation in Australia. This law includes the current and future superannuation rates, which the table outlines below:

YearSuper Guarantee (%)
Year starting on July 1 202110
Year starting on July 1 202210.5
Year starting on July 1 202311
Year starting on July 1 202411.5
Year starting on or after July 1 202512

Therefore, if your employee is eligible, you must make superannuation payments to their nominated fund a minimum of four times per year. You must pay into your employee’s fund on the following quarterly due dates:

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

Why Are These Rules Important?

You may face multiple penalties and charges if you do not pay an employee their entitlements.

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

Furthermore, 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 may commence legal proceedings against you. In this case, the FWO can make you back pay these wages and can deliver heavy penalties.

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

Paying Superannuation for Leave

Further, as an employer, you must pay superannuation when your employee cashes out their annual leave. For the purposes of superannuation, if an employee receives pay for unused leave upon termination of employment, this will not be included in the employee’s OTE.

Key Takeaways

As an employer, you must understand your obligations relating to minimum wage and superannuation entitlements. These obligations include being aware that the minimum wage:

  • does not include superannuation;
  • is the lowest wage that the law permits you to pay your employees; and
  • does not apply to workers aged 21 or under, workers on the Supported Wage System or apprentices and trainees.

If you need assistance determining your employee’s entitlements, our experienced employment lawyers can assist you as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

Frequently Asked Questions

Does the national minimum wage include superannuation?

The minimum wage does not include superannuation. The national minimum wage nor the minimum wages that modern awards outline include superannuation.

What is superannuation?

Superannuation refers to the contribution of a percentage of personal income that employers pay their employees to help them save for retirement. This is called the Superannuation Guarantee. Currently, employers in Australia must pay 10% of an employee’s ordinary time earnings (OTE) to a nominated super fund.

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