Employer Legal Obligations

The minimum super amount you have to pay is 9% of each eligible employee's earnings base. An employee's earnings base is generally their ordinary time earnings

Some workplace agreements specify more than 9% and wider eligibility for super payments.

Generally, you have to pay super for your employees if they:

• are aged between 18 and 69
• are paid $450 (before tax) or more in a calendar month
• work full-time, part-time or on a casual basis.

You may also have to pay super if the employee:

• is under 18 years of age
• earns $450 or more (before tax) in a calendar month
• works full-time, part-time or on a casual basis for more than 30 hours in a week.

You may also have to pay super for any employees who are visiting Australia on a temporary resident visa.

Employers must offer Choice of Superannuation fund to all eligible employees. Generally, an employee will not be eligible to choose their own fund if:

• they are employed under the terms of a workplace agreement that specifies the super fund/s into which payment must be made
• the employee is a member of a defined benefit fund and certain other conditions are satisfied (e.g. the fund is significantly in surplus)
• the employee is a member of a public sector fund.

Eligible employees must be provided with a standard choice form within 28 days of:

• commencing employment
• a written request (unless the employee has provided the standard choice form with in the past 12 months to the employee)
• the employer becoming aware that they are unable to contribute to the employee's chosen fund or becoming aware that the fund has ceased to be a complying fund
• a change to the employer fund.

If an eligible employee fails to exercise their choice, the form must indicate which default fund contributions will be made to on their behalf.

Once an eligible employee has chosen a fund, the employer has two months to make contributions to the fund.

Where an employee does not exercise choice or they fail to provide sufficient detail to enable a choice to be exercised, an employer is required to pay contributions into a default fund.

Industrial awards specify the default fund, or funds, which an employer must contribute to. In certain circumstances, complying default funds that were in place prior to 12 September 2008 continue at specific workplaces.

On 1 January 2010 new Modern Awards came into force. These awards may specify which superannuation funds an employer must make contributions to when an eligible employee fails to exercise choice of fund. Use our Fund Finder Tool which helps employers find the fund/s listed in their industry's Modern Awards.

There is an Industry SuperFund for every industry. To see if you are complying with your superannuation and award obligations, take a look at the Industry SuperFund that covers your industry.

Employers are also required to:

• keep records of employees who have been offered a choice of fund or not offered choice of fund
• keep records confirming any employer fund is compliant
• keep records for 5 years that show that financial obligations have been met
• keep copies of certain written information provided to employees and proof that superannuation contributions have been made to employee's chosen funds or the default fund
• refuse inducements to choose a particular fund 
• not give financial advice unless authorised to do so.

The ATO has some excellent web-based tools to help you understand and meet your obligations:

• Superannuation guarantee charge (SGC) - a statement and calculator tool to calculate your SGC liability and prepare the SGC statement to be lodged with the ATO.
• Employee/contractor decision tool - to help you work out whether your new or existing workers are contractors or employees for tax and super purposes.
• Superannuation guarantee eligibility decision tool - to help employers work out if they have an obligation to make super contributions for their workers.
• Superannuation guarantee contributions calculator - calculates how much super employers should be contributing for their eligible workers.

Total concessional contributions to an employee of over $25,000 a year (i.e. employer and salary sacrifice contributions) will generally be capped at $25,000 per annum. The concessional contributions cap for the 2012/13 year (1 July 2012 to 30 June 2013) is $25,000 for all age groups. However, the Government has announced that from 1 July 2014 for persons aged 50 or over with superannuation balances below $500,000 will be able to make up to $25,000 more in concessional contributions than allowed under the general concessional cap. A total of $50,000.

Employers are required by law to pass their employees' tax file numbers (TFN) (as quoted on their tax declaration form) on to their super fund for authorised purposes. Employers must quote an employee's TFN by no later than:

• the end of the day on which the employer makes the first super contribution for that employee
• if not available at time of first contribution, the end of the 14th day after the date the employee quotes their TFN to the employer.

An employer can provide a TFN through a fund membership application form completed by their employee or via contribution advice.

Employers who fail to meet these obligations will incur a financial penalty as determined by the Australian Tax Office.