Employer Super Obligations: Complete Guide to Superannuation Guarantee

Understanding employer superannuation obligations is crucial for both employers and employees. This comprehensive guide covers everything you need to know about the Superannuation Guarantee (SG) system in Australia.

What is the Superannuation Guarantee?

The Superannuation Guarantee (SG) is a compulsory system requiring most employers to contribute a minimum percentage of their employees' ordinary earnings to a complying superannuation fund.

Key Facts:

• Current rate: 11.5% (as of July 2023)
• Future increases: Rising to 12% by July 2025
• Applies to: Most employees earning $450+ per month
• Payment frequency: At least quarterly

Current SG Rates and Future Changes

Historical and Future SG Rates:

• 2021-2023: 10.5%
• 2023-2024: 11.0%
• 2024-2025: 11.5%
• 2025 onwards: 12.0%

The gradual increase ensures employees build larger retirement savings while giving employers time to adjust to higher contribution costs.

Who Must Receive Super?

Eligible Employees

Employers must pay super for employees who:

• Are 18 years or older
• Earn $450 or more (before tax) in a calendar month
• Are paid for work done in Australia

Special Cases

Under 18 years old: Must work more than 30 hours per week to be eligible

Contractors: May be eligible if they meet certain criteria (see "Employee vs Contractor" section)

Employee vs Contractor: Super Obligations

Employees (Super Required)

• Work under direction and control
• Use employer's equipment and facilities
• Integrated into the business
• Regular hours and ongoing relationship

Genuine Contractors (No Super Required)

• Control how work is performed
• Use own equipment and tools
• Operate independently
• Invoice for services

Grey Areas

Some workers fall into grey areas. The ATO provides tools to help determine worker classification.

How Much Super Must Employers Pay?

Calculation Method

Super is calculated on Ordinary Time Earnings (OTE), which includes:

• Base salary or wages
• Shift loadings and allowances
• Commissions and bonuses
• Overtime (for award-free employees)

What's NOT Included in OTE:

• Overtime payments (for award employees)
• Expense reimbursements
• Termination payments
• Some allowances and benefits

Example Calculation

Employee earning $60,000 annually:

• OTE: $60,000
• SG rate: 11.5%
• Annual super contribution: $60,000 × 11.5% = $6,900
• Monthly contribution: $6,900 ÷ 12 = $575

Use our Employer Super Calculator for precise calculations

When Must Super Be Paid?

Payment Deadlines

Super must be paid by the 28th day of the month following the end of each quarter:

• Q1 (Jul-Sep): Due 28 October
• Q2 (Oct-Dec): Due 28 January
• Q3 (Jan-Mar): Due 28 April
• Q4 (Apr-Jun): Due 28 July

Late Payment Consequences

Missing deadlines triggers:

• Superannuation Guarantee Charge (SGC)
• Interest and administration fees
• Potential penalties
• Loss of tax deductibility

Choosing a Super Fund

Default Funds

If an employee doesn't choose a fund, employers must pay into:

1. Employee's existing fund (if they have one)
2. A fund specified in an industrial award or agreement
3. A MySuper product chosen by the employer

Employee Choice

Employees can generally choose their own super fund, provided it accepts employer contributions.

Fund Requirements

Super funds must:

• Be complying funds
• Accept employer contributions
• Provide required member services

Record Keeping Requirements

Employer Obligations

Employers must keep records showing:

• Employee details and earnings
• Super contributions made
• Fund details and payment dates
• Calculation methods used

Record Retention

Keep super records for at least 5 years after making the contribution.

Common Compliance Issues

Underpayment of Super

Common causes include:

• Incorrect calculation of OTE
• Using wrong SG rate
• Excluding eligible employees
• Late payments

Solutions:

• Regular payroll audits
• Staff training on super obligations
• Professional payroll services
• Automated super payment systems

Superannuation Guarantee Charge (SGC)

When SGC Applies

SGC is imposed when employers:

• Don't pay enough super
• Pay super late
• Pay to non-complying funds

SGC Components:

• Shortfall amount: The unpaid super
• Interest: Calculated from due date
• Administration fee: $20 per employee per quarter

SGC is NOT Tax Deductible

Unlike regular super contributions, SGC cannot be claimed as a tax deduction.

Small Business Considerations

Simplified Reporting

Small businesses may be eligible for:

• Simplified BAS reporting
• Small Business Superannuation Clearing House
• Reduced compliance burden

Cash Flow Management

Tips for managing super payments:

• Set aside funds each pay period
• Use automated payment systems
• Consider monthly payments instead of quarterly

Employee Rights and Protections

What Employees Can Do

If super isn't being paid correctly:

1. Speak with the employer first
2. Contact the ATO
3. Lodge a complaint online
4. Seek union assistance

ATO Enforcement

The ATO can:

• Audit employer records
• Issue penalty notices
• Pursue legal action
• Garnish business assets

Technology Solutions

Super Payment Platforms

Modern solutions include:

• Integrated payroll systems
• Super clearing houses
• Automated contribution matching
• Real-time compliance monitoring

Benefits of Automation:

• Reduced errors
• Timely payments
• Better record keeping
• Compliance peace of mind

Frequently Asked Questions

Do I need to pay super for casual employees?

Yes, if they earn $450+ per month and meet other eligibility criteria.

What about employees on working holiday visas?

Yes, temporary residents are generally entitled to super contributions.

Can I pay super annually instead of quarterly?

No, super must be paid at least quarterly by the specified due dates.

What if an employee doesn't want super contributions?

Super is compulsory - employees cannot opt out of receiving super.

How do I handle super for employees with multiple jobs?

Each employer must pay super based on what they pay that employee.

Getting Help

Professional Services

Consider professional help for:

• Complex payroll situations
• Multiple employee types
• Compliance audits
• System implementation

ATO Resources

The ATO provides:

• Online calculators and tools
• Educational resources
• Compliance guidance
• Direct support services

Staying Compliant

Best Practices:

1. Regular reviews: Audit super payments quarterly
2. Staff training: Ensure payroll staff understand obligations
3. System updates: Keep payroll systems current with rate changes
4. Professional advice: Consult experts for complex situations
5. Record keeping: Maintain detailed, accurate records

Key Dates to Remember:

• July 1: New SG rates typically take effect
• Quarterly due dates: 28th of month following quarter end
• Annual reviews: Check compliance and update systems

Conclusion

Employer super obligations are a critical part of Australia's retirement income system. By understanding and meeting these obligations, employers contribute to their employees' financial security while avoiding costly penalties.

Stay informed about rate changes, maintain good records, and don't hesitate to seek professional advice when needed. Your employees' retirement depends on it.

Need to calculate super contributions? Try our Employer Super Calculator