On 1 July 2021, the superannuation guarantee rate will increase from 9.5% to 10%.

How employers manage this increase will depend on the arrangements they have in place with their employees.

Where employees are paid a remuneration package comprised of their take home pay and superannuation and other benefits, there may be scope for an employer to reduce the component of the employee’s remuneration paid as take-home pay with an increased amount to be paid as super.

However, before opting for this approach, employers will need to carefully review the employment agreements they have in place to be sure they have the right to make this adjustment. Consideration should also be given to how to best communicate the change to employees to avoid any confusion because employees are likely to notice a drop in their take-home pay, even if it is relatively small.

Where employees are paid wages exclusive of super, employers will be required to cover the increased superannuation guarantee without adjusting their employees’ take-home pay.

Over the coming month, employers should review the arrangements they have in place with their employees and work out how they will accommodate the increased superannuation guarantee.

Further information and contact details

For more information contact Leonie Kyriacou on l.kyriacou@pigott.com.au or John Pegg on j.pegg@pigott.com.au.

This article is intended to provide general information in summary form on a legal topic, current at the time of publication.  The contents do not constitute legal advice and should not be relied on as such. Formal legal advice should be sought in specific circumstances.

 © Pigott Stinson 2021