Finance Your Super One in seven employees to pay for higher super with cut to wages

One in seven employees to pay for higher super with cut to wages

More than one in seven employees are expected to cover the costs of more super.
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More than one in seven employees have been told their extra superannuation payments will be deducted from their wages, according to research from CoreData.

The worrying finding, which comes just weeks after the superannuation guarantee (SG) rose from 9.5 to 10 per cent of wages, has prompted lawyers to remind Australians that most workers are legally obliged to receive an increase in super without a cut in their take-home pay.

“If you think there is a problem, or you are not clear about your rights, the first port of call should be a union,” Maurice Blackburn senior associate Patrick Turner said.

Analysis by Industry Super Australia suggests average-income workers will see their overall income rise by $233 a year if their boss pays them the super increase. However if their take-home pay is cut to fund the super rise then they could lose that amount per year.

Tip of the iceberg

The 13 per cent of workers who will take a pay cut is probably only the tip of the iceberg, too.

More than four in 10 employees (43 per cent) said they did not yet know whether their employer would cut their wages to compensate for the higher SG, according to CoreData’s survey of 838 Australians.

CoreData CEO Andrew Inwood said workers may be in for a nasty surprise on super.

CoreData CEO Andrew Inwood said there was a lack of understanding among employees about the issue.

“Around four in 10 employees say they do not know about the July 1 SG changes at all, or they knew there are changes but do not know what those changes were,” he said.

The knowledge gap was at its worst among younger workers, with 30 per cent of those under 40 saying they were completely unaware of the changes.

The CoreData research found communication had been wanting between super funds and their members and between employers and their employees.

A nasty surprise

Less than 10 per cent of employees in the survey said they had been given details about the superannuation changes by their employer and only 6.9 per cent said their super fund had advised them of the SG rise.

Meanwhile, two-thirds of employees said they had received absolutely no information from their employers on the changes.

Mr Inwood said the higher super rate would “be a surprise for many”.

Employees are therefore being advised to check their payslip to see if the extra contributions are coming at the expense of take-home pay.

Maurice Blackburn’s Mr Turner told The New Daily most workers were entitled to receive the extra payments without a commensurate pay cut.

But he said this would depend on the nature of their employment.

Check your contract

“For those on industrial awards, the increase in super will result in an increase in total remuneration,” Mr Turner said.

“For people on enterprise agreements, most of those will be similar to awards and the SG rise will have to be paid [by the employer].”

This means the take-home pay of people on awards and enterprise agreements will remain the same but their super payments will increase.

But it becomes much trickier for the growing number of people on individual contracts – a group that accounted for about 37 per cent of Australian workers in May 2018, according to Parliamentary Library research.

Once the preserve of the highly paid, such contracts are spreading throughout the workforce, Mr Turner said.

“Many of those will specify that an employee will be paid a total remuneration package inclusive of superannuation,” he said.

“There, the devil will be in the detail.”

You need to check the conditions of your employment. Photo: Getty

People on these types of contracts need to read the small print.

If their contract says they will be paid, say, $80,000 inclusive of 9.5 per cent superannuation, then their boss’s request that they pay the SG increase out of their salary might be lawful.

But if their contract says “you will earn $80,000 inclusive of the superannuation guarantee that may be amended from time to time, then your employer will have to absorb the rise,” Mr Turner said.

So you need to check your specific situation.

Check first with your employer and then “if you think there is a problem or you are not clear about your rights, the first port of call should be a union,” Mr Turner said.

If that option is unavailable, you might want to approach an employment or industrial lawyer, but this option will cost you.

As for your SG payments, check with your super fund to see whether they have gone up.

But note that many companies pay superannuation entitlements on a monthly or quarterly basis, so checking your super balance directly will not necessarily tell you if you are being paid more super.

And nor will your fund will be able to help explain your rights, because they will not know your specific employment arrangements.

The New Daily is owned by Industry Super Holdings

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