Making superannuation payments on behalf of your employees? Know your superannuation obligations? Know when you don’t have to make superannuation payments?
There are clear guidelines that you, as an employer, must follow when determining whether you have to contribute superannuation payments on behalf of your employees. If you don’t pay your employees’ superannuation when you’re supposed to, you could face some significant penalties.
When does an employer have to pay superannuation?
Generally, you legally have to contribute superannuation payments on behalf of an employee if the employee is at least 18 years of age, and is receiving at least $450 per month (before tax) in a calendar month.
If an employee is under the age of 18, they must work more than 30 hours per week, in addition to earning at least $450 (before tax) in a calendar month, before you have to contribute superannuation payments on their behalf.
When is an employer Not Obligated to pay Superannuation?
In addition to an employee failing to meet the requirements set out above, you’re not legally required to contribute superannuation payments on their behalf in the following circumstances:
- if the employee is a non-resident and is performing work outside of Australia;
- certain foreign executives working on visas or entry permits;
- members of the Australian Defence Force reserve who are performing work carried out in that role; and
- non-resident employers who employ an Australian citizen or permanent resident to perform work outside of Australia.
Penalties for not Paying Superannuation
Employers face hefty penalties for failing to comply with their superannuation obligations. Besides still owing the full amount you failed to pay, failing to pay the minimum amount of superannuation will also result in:
- having to pay 10% interest on the outstanding amount of superannuation that is owed every quarter; and
- an administration fee of $20, per employee owed, per quarter.
In addition to the company penalties, if you’re a company director you’re also personally liable for the business’ superannuation obligations! As such, if your business fails to comply with its superannuation obligations, you may have to personally pay the superannuation owed on behalf of your employees. This obligation also includes past directors who were acting in that position during the period when correct superannuation wasn’t being paid.
But paying superannuation on time is only part of an employer’s obligations. In addition to paying superannuation on time, you must also keep records of:
- how much superannuation has been paid to each employee;
- confirmation that the business’ nominated fund has a MySuper product; and
- evidence that all eligible employees have been given a Standard Choice form.
With many businesses in Australia defaulting on their superannuation, it’s an area of special interest for the Fair Work Ombudsman. It’s easy to make a mistake with super, and easy to get caught out. Getting it right will protect you, your company, and the futures of the employees who keep you in business.
For more information on paying superannuation for your employees, clients should contact the HR Assured team. If you’d like more information about the benefits of becoming an HR Assured client, get in touch with us today for an informal chat.