For all of our business clients that employ staff, we wanted to remind you of the upcoming changes to compulsory superannuation contributions that will impact you from 1 July 2024.
Current Position
Under Australia’s Superannuation Guarantee Laws, employers are normally required to pay the equivalent of 11% of ordinary time earnings in FY 2023/24.
This has been legislated to gradually increase to 12% by 2025.
Increase from 1 July 2024
From 1 July 2024, this will increase to 11.50%.
The rate will continue to grow a further 0.5% to 12% from 1 July 2025.
How this will affect you
The impact of the increase on an employer will depend on how employment contracts are structured.
Usually, employment contracts are structured as:
- a base salary plus super or
- a total remuneration package which includes super
Base salary plus superannuation
In this situation, the employee’s take-home salary will not be affected and the employer must pay the increased contribution as super is exclusive of the employee’s salary.
Total remuneration package including superannuation
In this situation, it may be possible to absorb the increased contribution into the employee’s total remuneration with a consequential decrease in the employee’s base salary, so long as the employee is paid above the applicable minimum rate of pay under any award, enterprise agreement or the minimum wage. This will depend on the wording of the employment contract.
We suggest seeking legal advice to clarify your particular situation.
Employers must also consider the above changes for any contractors (or other categories of “workers”) who are deemed employees for SG purposes.
If you have any questions in relation to any of the details mentioned above, please get in touch with our office or book a meeting through Calendly here.
Kind Regards,
Eric Cirulis
Director/CEO