“Stronger Super” reforms for employers

There have been further details released since that time on some of the developments affecting employers – particularly regarding some new powers for the Fair Work Ombudsman in relation to payslip reporting, and a comprehensive new penalty regime in relation to non-compliance with proposed new standards for communicating employee data and superannuation contributions to superannuation funds. Also, the proposed increase in the level of Superannuation Guarantee contributions has now passed Parliament.

Superannuation Guarantee increase – now passed

The Superannuation Guarantee (Administration) Amendment Bill 2011 passed the Senate on 19 March 2012, but was dependent on the package of Bills associated with the Minerals Resource Rent Tax Bill 2011 being passed. That package of Bills has also now passed the Senate, which means that from 1 July 2013:

  • the superannuation guarantee charge rate will increase from 9% to 12% over a seven year period; and
  • the superannuation guarantee age limit (of 70) will be abolished.

Payslip reporting – what are the changes?

Legislation has been introduced into Parliament(1) which is designed to provide greater protection for “vulnerable workers” whose employers fail to pay their employees’ superannuation entitlements.

The amendments are proposed to be made to superannuation legislation(2) to require employers to report information about superannuation contributions on payslips.

The regulations will contain the details of the proposed amendments, and will not be enacted until the amending legislation gets through Parliament. However, the explanatory materials released so far explain the Government’s intention.

At present, some employers are required, under the Fair Work legislation, to report on payslips either:

  • entitlements to superannuation accrued during the pay period, or
  • actual contributions.

However, in relation to contributions disclosed on the payslip, employers are not required to state whether those amounts are just accrued or have actually been paid. Accordingly, an employee may be misled into thinking that the dollar amount of contributions noted on the payslip has actually been paid.

Therefore, it is proposed that employers will be required to include in payslips not only the accrued superannuation contributions relevant to the salary and wages payable in that pay period, but also the expected date that the employer intends to pay the contributions to the fund. It remains to be seen whether the required minimum quarterly SG payment dates can be put in as the default “plan to pay date”, even if the employer has a more precise expectation of when the contributions will actually be made if paid on a more frequent basis than quarterly.

The commencement date for this reform is not perhaps as clear as it could be. It seems that the change is likely to come into effect on 1 January 2013.(3) However, it may be that further changes will then commence on 1 July 2013 to require an actual date paid field to be added,(4) together with the name of the fund to which the contributions were made.(5)

The Government has assessed that these changes will have a minimal compliance cost impact on employers because it is apparently only a matter of software producers adding an additional field for the expected date and employers filling it in when issuing payslips. This remains to be seen, however.

To ensure complete information is given to employees, another aspect of these amendments will require superannuation fund trustees to give regular information to employees about the contributions received into the fund during the relevant period, so that employees can verify the information given by their employer, and challenge their employer if there is a discrepancy.

Although these reforms will be contained in the federal superannuation legislation, the Fair Work Ombudsman will have the responsibility of ensuring compliance with these new requirements. Fair Work Inspectors will have specific functions to promote compliance, monitor and investigate, commence proceedings in court and represent employees in court. They will have their usual powers under the Fair Work Act when enforcing the payslip provisions.

Therefore, the compliance and enforcement aspects under the Fair Work Act are being effectively broadened into separate legislation which will increase the legal complexity for employers in this area.

New data and payment standards – strict penalties apply

Some exposure draft “Stronger Super” reforms have been released which propose to affect the processes employers use for sending employee data and sending contributions to superannuation funds.(6) In particular,

  • employers will have to send enrolment information about their employees to superannuation funds in a standard electronic format; and
  • employers will have to send contributions to super funds in a standard electronic format. (No more cheques will be allowed!)

These arrangements may commence from July 2014 – although there will be an additional year allowed for “small employers” (ie employers who have less than 20 employees) to comply.

Employers dealing with payments and information relating to an employee must comply with these regulations and standards that are applicable to employers.

Bottom line for employers

Employers should:

  • start thinking about how the increased level of SG contributions will affect remuneration packages from 1 July 2013;
  • consider any older workers aged 70 or more, as SG contributions will need to be made for them from 1 July 2013;
  • make arrangements to be ready for the new payslip requirements so that the “plan to pay” date field can be added to payslips, which may start from 1 January 2013 – and be ready for further possible changes once the detail of the regulations becomes available; and
  • plan to be ready for the new data and payment standards and regulations, which may commence on 1 July 2014 (or 1 July 2015 for small employers) – and ensure systems and processes are configured for full compliance to avoid the comprehensive penalty regime which will otherwise apply.

(1) Tax and Superannuation Laws Amendment (2012 Measures No.1) Bill 2012 (Bill)
(2) The Superannuation Industry (Supervision) Act 1993
(3) Paragraph 6.29 of the Explanatory Memorandum to the Bill.
(4) Paragraph 6.8 of the Explanatory Memorandum to the Bill.
(5) Based on the exposure draft materials released before the Bill was introduced.
(6) Exposure Draft – Superannuation Data and Payment Standards, released by Treasury for consultation on 9 February 2012.

This article was reproduced with permission from Lander & Rogers.
For further information, please contact Daniel Proietto | Partner, Workplace Relations & Safety ( dproietto@landers.com.au) or Amie Frydenberg | Senior Associate, Workplace Relations & Safety ( afrydenberg@landers.com.au).