By Amy La Verde

25 June 2021

From 1 July 2021, a superannuation (super) increase from 9.5% to 10% of employee’s ordinary time earnings will occur. This is the first step, with further increments at the rate of 0.5% per year to come over the next five years.

The degree to which an Employer or Employee will be impacted by these changes will depend on the terms and conditions of the employment contract.

Employer Impacted

Where an Employee’s contract stipulates that they are paid a base salary plus super, the Employer must make the increased payment. However, where a contract stipulates that the salary is plus super at the rate of 9.5%, the Employer must make the increased payment and we recommend that the contract be updated to reflect the current increase as well as future increases.

Employee Impacted

Where an employment contract provides for a total remuneration package inclusive of superannuation, there will be no impact to the Employer and the increase will be absorbed within the package rate subject to any contrary terms of an applicable Award. In other words, the impact of this will be to the Employee. We recommend that Employers review the remuneration of Employee’s to ensure that they are not paid less than the minimum Award rate after the absorption.

What to do

We recommend that Employer’s review the terms and conditions of their current contracts of employment to determine the impact to their business and what changes to contracts need to be made (if any) prior to 1 July 2021.

Changes to an Employee’s terms and conditions of employment cannot occur without their consent. Any unilateral change made by the Employer may give rise to an unfair dismissal, general protections and/or breach of contract claim.

Please do not hesitate to contact our employment team (Simon Abraham and Amy La Verde) if your business needs further guidance or support in relation to navigating the superannuation increase.

Related Articles

View All
Employment Law / Small to Medium Enterprises / Start-ups & Emerging Enterprises

Employment Law updates unpacked: What every employer needs to know

The changes to come into effect will impact workplaces nationwide, necessitating employers’ understanding of their...
Read More
Employment Law

Changes for employers are on the horizon: Key Amendments from the Closing Loopholes bill

The Fair Work Legislation Amendment (Closing Loopholes No 2) Act 2024 (“Closing Loopholes No 2 Act”) received Royal...
Read More
Commercial Law / Commercial Contracts & Agreements / Employment Law

Payroll Tax – Medical Centres and Contracted Practitioners

  The recent SRO Ruling (PTA-041) on 11 August 2023, confirms the SRO’s stance on the payroll tax obligations of...
Read More
Commercial Contracts & Agreements / Employment Law / Litigation & Dispute Resolution

New Limitations On Fixed Term Employment Contracts – Employers need to know what they don’t know!

As of today (6 December 2023), there will be new rules that impact the use of fixed term employment contracts These are...
Read More
Employment Law / Litigation & Dispute Resolution / Commercial Contracts & Agreements

Real Estate Agent Commission Victory shakes up Fair Entitlements Guarantee (FEG) Scheme

Tisher Liner FC Law has been acting on behalf of one such ‘eligible employee’ over the past three (3) years Our...
Read More
Employment Law

Navigating Employment Law Changes – What Employers Need to Know Mid 2023 Part 2

As we enter the latter half of the year, it is imperative for employers and businesses to remain updated on the...
Read More
Employment Law

Navigating Employment Law Changes – What Employers Need to Know Mid 2023 Part 1

As we approach the halfway mark of the year, significant changes are underway in Australia’s employment law...
Read More
Commercial Law / Employment Law / Litigation & Dispute Resolution

International Women’s Day 2023: Embrace Equity

Have you ever wondered why the hallmark colours of International Women’s Day are vibrant purple, bold green and stark...
Read More
Employment Law

Employers Beware! – Minimum Wage increases take effect tomorrow

National Minimum Wage increase The Fair Work Commission has announced the National Minimum Wage (‘NMW’) will...
Read More
Employment Law

Psychiatric injury due to prolonged workplace trauma – a warning for employers from the High Court!

The much anticipated High Court decision of Kozarov v State of Victoria [2020] VSC 78 (Kozarov) has provided much...
Read More
Employment Law / Small to Medium Enterprises

Boosting workplace vaccinations – who needs a third dose?

What are the new vaccine mandates Beginning 12 January 2022, workers over 18 years of age in essential fields, unless...
Read More
Employment Law

‘R E S P E C T’- Part 2 – find out what it means…..for women

As foreshadowed in our previous article, the Federal Government has succumbed to public pressure and taken much needed...
Read More