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It is now more critical to give careful consideration to the requirements of the awards employers are hired under.
It is now more critical to give careful consideration to the requirements of the awards employers are hired under.
The 1 January 2024 change to the National Employment Scheme (NES) that sees super contributions included, brings more weight to bear on employers paying super contributions on Ordinary Time Earnings (OTE) correctly (and on time) based on the relevant award.
The Australian Bookkeepers Network (ABN) Director, Peter Thorp, says that it is now more critical to give careful consideration to the requirements under the awards employers are hired under.
Be mindful of awards as well as Super Guarantee requirements
“Issues may occur when considering peculiarities around awards that insist on paying super contributions differently than what has been usual practice under Super Guarantee, ” said Peter.
“For example, under Super Guarantee rules super hasn’t been necessary for payment on anything outside “Ordinary Time Earnings” such as on lump sum payments and workers compensation.
“There are cases though that some awards may require super be paid on workers compensation, such as the clerical award.
“Now awards really need to be referenced by bookkeepers to understand the employer’s full range of superannuation obligations to satisfy both their SG and NES obligations. Understanding both obligations should avoid confusion and the chance for significant penalties for employers.
“Careful attention is also needed where awards differ on the percentage to pay, which is different from the minimum expectation of 11% advised by Super Guarantee.
“Some people also just get one big salary package. Where distinctions aren’t made between Ordinary Time Earnings and other entitlements such as travel cost reimbursement, overtime or long service leave, then all employee earnings require super to be paid,” said Peter.
Caution needed to correctly classify the many allowances under each award
Group CEO of HR Central and ABN Partner, Damien Gooden, says that issues also arise because of the complexity of the many allowances offered under different awards.
“Changes like these are another example of what so often prompts flustered bookkeepers to reach out to us over the growing complexity of the Australian employment landscape and our award system,” said Damien.
“The complexity in the building and construction award for example with its dozens of allowances is a breeding ground for mistakes.
“Some allowances require super payments while others don’t. Wrongly classifying allowances now makes employees vulnerable to significant penalties,” continued Damien.
“Overdue payment can also lead to significant penalties when considered to be deliberately made by employers.
“Ultimately employers must be committed to giving enough time for the super clearing house to transfer funds by the due date and be diligent in getting the amount of the payment right.
“It’s also important to make sure when you bring on a new employee that they understand what award they are being paid under, what allowances are applicable under that award and how they are classified.”
Damien invites ABN members to subscribe to the HR Central support service which offers a year-round hotline to address any concerns and questions about employer responsibilities. Be sure to ask about special ABN member pricing.
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