Hold on to your hats ladies and gentlemen, the latest Federal Budget will be handed down next week on 11 May and it’s sure to come with things that will delight and things that will upset depending on what you, your family or your business needs. As an HR consultancy, we aren’t really in the business of speculating about what the government might do but one area that is of importance to all and will require business leaders to manage, are the proposed changes to Superannuation Guarantees….
WHAT’S HAPPENNG WITH SUPERANNUATION?
There has been much conjecture in the media of late as well as a campaign by the nation’s largest superannuation lobbyist as to whether or not the Federal Government would make changes to the legislated superannuation guarantee rise that is due to commence from 1 July 2021.
Just in case you aren’t across the exact details, the planned increases are due to occur as follows:
One week out and indications are that the guarantee as it stands, is likely to remain as outlined for 2021.... but there may be changes to the timetabled rollout for 2022 onwards. We all still need to wait for the definitive announcement from the Treasurer but it it’s worth considering that at this point, it’s likely that you will need to manage a change in less than two months, and that obviously has budgeting and payroll implications for your business.
MANAGING SUPERANNUATION INCREASES
Superannuation is a legislated entitlement, so it is a cost involved in running a business and having employees and/or sole trader contractors. How you have this piece of the payroll puzzle set up will determine how you are impacted by the upcoming increase.
For example, some businesses provide a full remuneration package in which their superannuation is accounted for along with the employee’s salary and the cost of any other benefits. In this instance, you may decide to apply an increase to the overall salary package to ensure the employee receives the financial benefit of the SCG increase, but you don’t have to. You can just advise employees that due to the SCG increase, the employee will start to receive less in their pay packet to accommodate the .5% increase that will need to be directed to their superannuation. There is of course the consideration of employee engagement around this…..
For the businesses that pay a set salary plus superannuation, the increase will be theirs to carry and will not impact the pay packet of the employee.
ARE YOU IMPLEMENTING PAY RISES?
It’s not unusual to see businesses review remuneration packages and set salaries as we click over into the new financial year on 1 July. This also aligns with any changes that come through based on the Minimum Wage Review that occurs annually. Regardless of your timing of any upcoming pay reviews, if you are contemplating increases outside of those legally mandated though Awards or EBAs, you may want to consider how you apportion the rises.
For example, you may decide to give Mary an increase of 4%, and you advise her that her remuneration is increasing by 4%. She will see 3.5% increase in her salary and 0.5% increase in her superannuation contribution.
Whichever way you go, make sure the outcome satisfies all of the minimum pay and conditions of employment under the National Employment Standards (NES).
If you are in any way unsure about what you are required to do or how you might structure the change, contact the team at HR Staff n’ Stuff and we’ll support you with your individual business situation.
The HR Staff n' Stuff team all contribute to our blogs. Enjoy the read!