From 1 July 2021, the required amount of superannuation support you provide your employees increases from 9.5% to 10%.
We know it’s only 0.5% of an increase but for some businesses this will not be insignificant. Given the recent history of the ATO coming down much harder on employers who do not meet their superannuation guarantee obligations, it’s not the time to risk getting this wrong. Remember this increase is not a once-off. The percentage employers are required to pay is set to go up in 0.5% increments every year until it reaches 12% on 1 July 2025.
What do I need to do?
Review your employment agreements to understand whether your employment arrangements are either:
- inclusive of super, or
- plus super.
If your arrangements are plus super, you must pass on the increase. If your arrangements are inclusive of super than the salary component of the remuneration package may decrease by the same amount that the super needs to go up.
Of course, irrespective of your legal obligations under employment contracts and/or awards, think about how to convey your message to the team and your strategy to manage this additional cost of employing people. Some employers [not all], are opting to pay the additional amount without reducing the base salaries paid.
One of the strategies to consider is to align your pay reviews with the increase. This means that as the SGC rates increase in the next few years, you can absorb it into the salary package.
Review your agreement and be clear on your position now because employees will not appreciate a surprise when they get their first pay in July!
Not sure where to start?
If you are unsure how best to approach the super guarantee rate changes, businessDEPOT can provide you with HR Consultancy support to assist your business in how to best implement these changes.