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.

About SuperBenefitnews

Self-Managed Superannuation Service Providers in Australia. SuperBenefit provides a wholistic SMSF assistance, education and administration service continuum - 1. “assistance” is help of whatsoever nature where our overall SMSF experience and knowledge enables us to provide assistance/help without any legal (or “license”) limitations. 2. “education” involves providing knowledge through teaching, coaching and mentoring about all matters SMSF, including (but not limited to) investment issues such as equities and property, 3. “administration” encompasses all admin aspects of legally required SMSF trustee and member record keeping including (but not limited to) audit and ATO matters. In keeping with our key point that SuperBenefit does not provide Financial Advice, where issues arise from 1, 2, and/or 3 above Indicate a need for a legally authorized provider (such as a Financial Adviser) and the client does not have their own service provider, the client can utilize SuperBenefit’s ‘Connect Assist’ … SuperBenefit, in itself, does not provide Financial Advice, but it does provide the wherewithal for great SMSF service. WE do not provide Financial Advice or any other service that requires a legally authorized provider. However, where such advice or service is required we have our ‘Connect Assist’, a SuperBenefit resource we use to connect clients to a Licensed Advisor or other legally authorised service provider. Call us 0407 361 596, no obligation FREE Connection call to see how we can help you!
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