The Super Guarantee for the 2023/2024 financial year has increased to 11% of earnings. This is in line with the Federal Government’s amendment to the Superannuation Guarantee (Administration) Act 1992 requiring employers to increase employee superannuation contributions by 0.5% each year. The rate is expected to peak at 12% by July 2025.

How does this affect salaries or wages?

Superannuation increases may affect employees differently depending on how their salary or wages are paid in accordance with their employment contracts. For employees who are paid in accordance with a Modern Award or Enterprise Bargaining Agreement, superannuation is usually paid on a ‘plus superannuation’ basis.

Construction of the employment contract is key. If an employment contract states “plus superannuation” an employee’s take-home wage or salary will remain unaffected and the employee’s superannuation contribution will increase in accordance with the legislated increases.

If an employment contract states “inclusive of superannuation” the employee’s wages or salary will absorb the legislated superannuation increases. It means that employees will take home less with each increase in the Super Guarantee.

This does not mean employers can draft an employment contract where the employee is paid the minimum under a Modern Award inclusive of superannuation to avoid paying the employee less wages. Such a term may be illegal or in breach of the minimum terms prescribed by the Modern Award.

It is important to be transparent with employees about how increases in the Super Guarantee may affect their wages or salary. A salary inclusive of superannuation may demotivate employees as they will receive less renumeration in hand if their wages or salaries are not increased to accommodate for legislative increases.

Want to find out more on the superannuation increase?

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