Workers are being warned to pay close attention to their payslips after July 1 after some employers said they would cover the cost of increased superannuation contributions with reductions in take-home pay.

The largest super bump in two decades is due next week, with minimum payments rising from 9.5 to 10 per cent of wages.

The change will leave the average worker about $233 a year better off, according to Industry Super Australia analysis.

But some of Australia’s largest employers are already preparing to reduce base salaries to fund the super increases, drawing the ire of unions.

And unfortunately for workers, it’s not entirely illegal for employers to do this.

What you need to know

So, what are your rights? And how can you protect yourself?

Firstly, Workplace Law director Shane Koelmeyer says workers should read their next payslip closely to make sure their wages weren’t cut.

“It’s not right to reduce the base rate of salary when there’s a super increase,” Mr Koelmeyer told The New Daily.

“Just because you can doesn’t mean you should.”

If you do notice your take-home pay has gone down, the next step is to read your employment contract and check if this is legal.

Mr Koelmeyer said workers with salaries listed as “total remuneration packages” or “remuneration inclusive of super” could legally lose some of their pay to fund the super increase.

A worker on a $60,000 salary could lose $300 a year in wages to pay for the 0.5 per cent rise without changing their “total remuneration” as listed in their contract.

“Check your contract to make sure,” Mr Koelmeyer advised.

About 37 per cent of Australian workers are employed under individual  contracts, according to Parliamentary Library research.

ACTU President Michele O’Neil said cutting wages to pay for super is “illegal in the vast majority of circumstances”.

“Any workers who are concerned about their employer cutting into their wages to meet the new superannuation guarantee increase should contact their union,” she told The New Daily via email on Monday.

TND understands the ACTU is referring to workers employed under the modern award system, where superannuation contributions are set out separately to minimum pay rates.

As for workers under enterprise bargaining agreements, the legal picture is less clear, a Fair Work Ombudsman spokesperson said on Monday.

“In some instances, the terms of an applicable enterprise agreement may be relevant,” the spokesperson told TND in an emailed statement.

“Employers in this situation must ensure they continue to pay their employees at least their minimum entitlements, including any entitlements from an applicable award, enterprise agreement or the national minimum wage order.”

Superannuation and wages growth

The July 1 increase is the first of five super guarantee rises that will see the contribution rate move from 9.5 per cent to 12 per cent by 2025.

It will leave the average worker aged 35 up to $86,000 better off by the time they retire, according to analysis by Colonial First State.

CFS says the average worker aged 45 years today could be $51,580 better off, based on an assumed (and conservative) 5 per cent annual return.

But these calculations don’t take into account the impact of lower wages growth in the short term, which many economists believe is an inevitable consequence of higher superannuation payments.

The theory is that bosses will offer lower pay rises than they otherwise would have to offset the financial impact of paying higher super contributions.

There’s nothing illegal about this, and it could result in your purchasing power going backwards, particularly because wages growth is already low, running at just 1.5 per cent in the year ended March 31.

Grattan Institute research has found about 80 per cent of a rise in super contributions is passed on to workers through lower wages growth.

The Grattan study analysed 40,000 enterprise bargaining agreements, a class of employment deal that covers about 40 per cent of all workers.

Mr Koelmeyer said workers on enterprise agreements should also make sure their employers don’t go against any future pay rises to which they have agreed in an attempt to offset superannuation increases.

The New Daily is owned by Industry Super Holdings