“Should I be getting paid super?” – The Superannuation Obligations of an Employer

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By Matthew Shearing

Superannuation is payable by any employer paying salary or wages to an employee in Australia unless certain exceptions apply. In the Superannuation Guarantee (Administration) Act 1992 s11(1)(ba), a salary or wage is deemed to be:

“Payments under a contract referred to in subsection 12(3) that are made in respect of the labour of the person working under the contract.”

It also sets out who an employee is for the purpose of the Act in subsection 12(3):

“If a person works under a contract that is wholly or principally for the labour of the person, the person is an employee of the other party to the contract.”

Therefore, if you are under a contract for labour, you are an employee. If you are working in Australia, this entitles you to superannuation payments unless an exception applies.

The general exclusions for salary and wages can be found in the Superannuation Guarantee (Administration) Act 1992 s27. They state that you do not have to pay superannuation to an employee:

  • Who is not a resident of Australia for work done outside Australia;
  • Who is a resident of Australia but is performing work outside of Australia for an employer who is not a resident;
  • Who is not a resident of Australia working in the Joint Petroleum development area;
  • Who is a prescribed employee; or
  • Who is paid less than $450 a month.

Most of these are self explanatory, but the term ‘prescribed employee’ requires further clarification.

The Superannuation Guarantee (Administration) Act Regulations 1992 s7 sets out what a prescribed employee is for the purposes of the act. Essentially, it is an employee on any number of international work visas including 413, 456, 956, 977 and 457. Visas such as these mean the employee is in most cases exempt from payment of superannuation due to the temporary nature of the employees’ status in Australia.

If an employee does not fall under any of the exclusions, and they are an employee for the purposes of the Act, then the employer has a legal obligation to be paying superannuation. Failure to do so means an employee has a right to recover the lost super under the Fair Work Act 2009 (Cth), and the employer also risks investigation and sanction by the Australian Tax Office.

For people working under contracts with corporations incorporated in another country, you should carefully consider whether the work you are undertaking is in Australia or not. In most cases, whether you are entitled to be paid superannuation is clear. Consider for example, the worker who is employed in an overseas location by a company incorporated in another country. In those circumstances, the worker would not be eligible to be paid superannuation. However, if that worker was then seconded to work in Australia, for an Australian company for some or part of the contract period, the worker may be entitled to be paid superannuation.

If you believe you have been deprived of superannuation, or are concerned as to whether you are fulfilling your obligations as an employer, book a consultation with our Employment Law experts by calling the Business Development Team on (07) 3252 0011 or you can contact us here.