Did you know the super guarantee rate is increasing from 1 July 2021? Don’t get caught out!
O*NO! There are changes to super coming in on 1 July 2021, you’ve been busy and you aren’t across the changes and how they will affect your business. How will this impact on you and your employees? Will your existing employment contracts need to be changed? What about salary sacrifice arrangements?
What are the new super changes?
On 1 July 2021 the super guarantee rate will be increased from 9.5% to 10%. On a basic level, this means your accounting and payroll systems need to be updated so employees receive the full amount of their super entitlement under the changes. Please be mindful that some contractors being treated as employees for super purposes will also have this increase applied to them.
While this increase of 0.5% is about to start, buckle up and keep in mind that further 0.5% increases to the super rate will be implemented each year until 1 July 2025 when it will reach 12%.
Salary sacrificing
You may have some employees that are making salary sacrifice contributions. While these salary sacrifices are not impacted overall by the super increase, the salary sacrifices can’t be used to account for the extra 0.5% of super. Any contributions made on behalf of an employee under salary sacrifice are independent of an employer’s legislated super contributions.
Will your costs of employing staff change?
In lawyer speak – that depends.
If your employees are engaged under contracts that state their wage is exclusive of super, their gross wage won’t change but your costs will increase to make sure the new super guarantee rate is applied.
If your employees are engaged under employment contracts where their wage is inclusive of super, or they are on total remuneration packages, your cost of employing staff may not change but your employees’ gross wages will become lighter as more of their contracted wage will need to be directed to super.
If you have total remuneration packages or contracts that include super as being part of the overall wage, you will need to make sure that your employees don’t fall below minimum wage requirements.
Awards and minimum wage
If some of your employees are employed under the Real Estate Industry Award and their contract stipulates that their wage will be reduced as a consequence of the increased super rate, you will need to make sure that they are still being paid at least the minimum wage under that Award.
As the super rate will be increasing each year until 2025, you will need to do calculations before the end of each financial year to make sure that you are remaining compliant with the Award and with employment wage requirements.
Will you need to amend employee contracts?
If you have employees that are:-
employed under the Award; and
their employment contract stipulates a total wage inclusive of super; and
there is a risk of you becoming non-compliant with an Award and/or minimum wage requirements;
instead of amending contracts annually, you may wish to amend contracts (with employee consent) so any changes to wages as a result of yearly increased super contributions will only reduce the employee’s gross wages to the extent that it does not breach minimum wage requirements.
Key Takeaways:
If your real estate agency engages employees, you need to make sure:-
you pay the correct amount of super once the increase kicks in on 1 July 2021;
diarise and plan for the yearly super rate increases;
apply the super increase to contractors being treated as employees for super purposes ;
to review your employee contracts to remain compliant with the Award;
to review your employee contracts to remain compliant with minimum wage requirements; and
any employee contracts that may breach employment legislation are amended to incorporate planned annual super increases.
Your next steps
For further information or if you want to have your arrangements legally reviewed, contact O*NO Legal at [email protected] or join the REAL Membership where you will have access to our real estate specific Employment Agreement templates that are updated to comply with the superannuation increases and other legislative changes to ensure you remain compliant with employment legislation.
Boring legal stuff: This article is general information only and cannot be regarded as legal, financial or accounting advice as it does not take into account your personal circumstances. For tailored advice, please contact us. PS - congratulations if you have read this far, you must love legal disclaimers or are a sucker for punishment.