Workplace relations laws complex

The workplace relations legal landscape is complex with many employees covered by the Commonwealth’s Fair Work Act. This is because they are employed under a Federal award or because the State or Territory in which they work, referred powers to the Commonwealth permitting it to make laws about industrial relations matters. All States and Territories, except for Western Australia, made these referral powers although some employees, for example State public servants in some jurisdictions, are still employed under specific State laws.

National Employment Standards (NES)

From 1 January 2024, superannuation was listed as an item that employers had to comply with under the NES. This requirement is satisfied if Superannuation Guarantee (SG) contributions are made by the required time (28 days after the end of each quarter). The inclusion of superannuation enabled the Fair Work Ombudsman (FWO) to enforce compliance with SG requirements in conjunction with the ATO. A Court can impose civil penalties for breaching the NES.

"From 1 January 2024, superannuation was listed as an item that employers had to comply with under the National Employment Standards."

Although the Fair Work Act requires that salary and wages be paid at least monthly, it is silent about the remittance of employee after-tax or salary sacrifice superannuation contributions as these matters can sometimes be dealt with in specific awards. The clerical award, for example, states that after-tax contributions can only be deducted from an employee’s remuneration if the (employee) agreement is in writing and the amount deducted is paid within 28 days after the end of the month in which the deduction was made. The clerical award is silent about the payment of salary sacrifice contributions.

It has been the ATO’s view for many years that SG contributions are not required for worker’s compensation payments when an employee is not working because of a workplace injury. The ATO is of the view that such amounts do not form part of Ordinary Time Earnings (OTE). The clerical award says that SG contributions should be paid on such amounts.

SG penalties

The SG penalties apply when an amount of OTE has been paid, meaning the SG laws do not apply if an employee has not been paid. The SG penalties apply considering what employer superannuation contributions should have been paid as percentage of OTE by a specified date. If an employer is found to have breached the SG requirements the penalties that may apply are deemed by the Constitution to be a tax.

In our joint submission about Payday Super with CPA Australia, FAAA, IPA, SMSFA and TTI, we mention ten different penalties under the SG laws including:

1. Penalties of up to 200% on the total of the SG underpayment and foregone superannuation fund earnings.
2. An administrative default assessment penalty of 75% of the shortfall where a taxpayer makes a false or misleading statement.
3. The general interest charge (GIC) on any late payment of the SGC.
4. Many SG penalties cannot be claimed as a tax deduction.
5. Director penalty notices can be issued for unpaid SGC.

With the introduction of Payday Superannuation, our joint submission recommends to the government that these need urgent reform.

Superannuation included in theft provisions by the Greens

Initially all superannuation contributions were exempt from the wage theft provisions because “compulsory superannuation contributions are enforceable under the comprehensive superannuation framework. Superannuation entitlements may also be enforceable as workplace entitlements under the FW [Fair Work] Act, by way of proceedings for a contravention of a civil remedy provision.”

The government agreed with the Greens proposal during the Closing Loopholes legislation debate in the House of Representatives, that wage theft provisions be expanded to include superannuation contributions.

Link to part two of this article can be found below.