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By Allyson Fletcher
Human Resources

Are you up to date with the changes coming up with regards to Superannuation Guarantee Contributions (SGC)?

As of 1 July 2021, the current SGC rate will increase from 9.5% to 10.0% for all eligible employees.  This means all employers will need to pay the extra amount to the employee’s chosen superannuation fund.

Employers should check their employees’ employment contracts to confirm what has been specified as they may be able to absorb the increase within the employees’ existing salary.  This will depend on what has been outlined in the employee’s employment contract.  If the employment contract states that the employee is being paid a Wage as per an Award and the employment contract identifies that SGC is to be paid separately to this, then the employment contract will not need to be changed and the employer will need to pay the increase.

This will be the same for an employee whose employment contract states SGC is to be paid separately to the salary amount.  Where employees have employment contracts that have the SGC separate but have the percentage outlined, then the employer will need to update the employment contract and pay the extra SGC.  For those employees who have an employment contract that stipulates that the SGC is included in the package, eg $80,000.00 inclusive of SGC, employers will be able to absorb the SGC increase within the employee’s existing package.

Employers should consider two things:

  • Have they carried out a Better Off Overall Test (BOOT) to confirm that the employee is still being paid as per the Award/Minimum employment guidelines?
  • What kind of culture will the employer be creating if it absorbs the SGC increase in an employee’s existing package?

Where there is no employment contract, the employer will need to pay for the increase in SGC.

Also on Superannuation news, the Australian Federal government has announced plans to scrap the $450.00 per month threshold for SGC as of 1 July 2022 as part of its 2021-22 federal budget.  Any employee earning less than $450.00 per month from one employer who has met other eligibility requirements will have superannuation payments made as part of the SGC scheme. The government expects this plan to become legislation before July next year so keep your eyes open for further announcements as this develops.

If your business needs help in understanding any of these changes; need a new/existing employment contract amended; or if you need help with completing a BOOT, please contact one of our friendly HR specialists who will be more than happy to help you.

Book a 15min FREE Chat and speak with one of our qualified and experienced HR Consultants.

KBA Useful Information:

At KBA we are a team that is passionate about taking businesses from good to great. We are HR consultants in Melbourne, Australia specialising in providing tailored HR advice and solutions to help businesses thrive. Whether you want to grow your business, better manage your staff, ensure your business is following HR best practices, or ensuring you remain compliant, then please contacts us today as we are here to help!

Phone 1300 4 ADVICE or email info@keyba.com.au

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