Employment contracts and the new rising Super Guarantee – Caution

Compulsory employer superannuation (SG) contributions will increase from 9% to 12% of employee ordinary time earnings from 2013 to 2019.
Note that some clauses in contracts provide a total remuneration package inclusive of superannuation contributions. Some employers may think that this permits you to reduce the salary or wage component of an employee’s remuneration package to ensure that the overall package amount remains the same, indirectly allowing for  the increase in the SGC component.
But  a warning: under section 326 of the Fair Work Act you cannot enforce a term in an employment contract that allows you to deduct an amount from salary if the deduction is directly or indirectly for your benefit or is unreasonable in the circumstances, and if the contract does not specify the amount of the deduction.
However, you may deduct an amount from salary if:

  • the employee authorises the deduction in writing (the authorisation must specify the amount of the deduction); and the employee can withdraw authorisation at any time
  • the deduction is principally for the employee’s benefit e.g. sacrificing salary for superannuation.
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