From 1 July 2022, the superannuation guarantee rate will increase from 10% to 10.5% of an employee’s ordinary time earnings.
Whether employers need to bear the cost of this increase will depend on the wording of the particular employment contract or industrial instrument that governs the employment relationship. If the employee’s remuneration is expressed as being made up of base pay plus superannuation, then the employer will likely bear the cost of the increase in superannuation contributions.
On the other hand, if the employee’s remuneration is expressed as being a ‘total remuneration package’ or similar expressions which show that remuneration is inclusive of superannuation and other benefits, it is likely that the employer can reduce the employee’s take-home pay proportionally to account for the increase in the superannuation guarantee, so there is no increase in costs to the employer.
Whether employers who are entitled to would choose to reduce their employees’ take-home pay in the current high inflation and cost of living climate will be a matter for each employer. Certainly, organisations which took that approach last year were highly criticised, both by employees and publicly.
If you are an employer or employee needing advice, reach out to our highly skilled team.
