Late Payment of Superannuation now falls under Wages Theft
From 1 January 2024, superannuation was listed as an item that employers had to comply with under the National Employment Standards (NES).
This means that you must make your Superannuation Guarantee (SG) contributions within 28 days of the end of each quarter).
This inclusion of superannuation lets the Fair Work Ombudsman (FWO) enforce compliance with SG requirements as well as the ATO. The result of this is that you can be taken to Court and have civil penalties imposed on you for breaching the NES.
Further to this – late payment of Superannuation Guarantee amount is now included as Wages Theft.
Given the seriousness of potential penalties under the wage and super theft provisions it is very important that employers understand which awards or instruments their employees are employed under.
What is wage or superannuation theft?
The definition of Wage theft is that an employer “engages in conduct” with the intention of not paying the required amounts when they are due.
Employees covered by the new rule for superannuation contributions
If an employer does not make superannuation contributions as required by the Fair Work Act(FWA), through a Fair Work instrument, which is a fancy term for either an award or enterprise agreement, then you should assume these new rules will apply.
Employees exempt from the new rule
All employees covered by FWA under the referral of industrial relations powers by a State or Territory are exempt from this new provision in relation to superannuation contributions.
The new wage theft rule do not apply for employees covered under the FWA because of the States or Territory already have powers to prosecute you for intentional late or non-payment of wages and superannuation.
If you are not sure which set of rules your Team falls under, the best thing to do is to discuss your particular circumstances with a HR specialist.
In either case – penalties may apply – so on-time payment of your superannation obligations is extremely important.
Intention vs absolute liability
Wording is also important.
The new wage theft provisions state that they may apply if an employer “engages in conduct” with the intention of not paying the required amount on or before the required time.
It is clear that underpayments that are accidental or based on a genuine mistake are not caught by these provision.
Potential penalties
If a Court determines that wages theft has occurred the penalty will be up to the greater of three times the underpayment amount and:
for an individual – 5,000 penalty units (currently $1.565 million; but increasing to $1.65 million)
for companies – 25,000 penalty units (currently $7.825 million; but increasing to $8.25 million)
In other cases, fines will be up to:
for an individual – 5,000 penalty units (currently $1.565 million; but increasing to $1.65 million)
for companies – 25,000 penalty units (currently $7.825 million; but increasing to $8.25 million)
Super contributions potentially caught by this provision
The guidance coming from the Institute of Chartered Accountants around this matter is that the rules may cover many super contributions including:
SG contributions paid late including those which leave an employer’s bank account in time but for whatever reason are not allocated to an employee’s superannuation fund’s bank account by the required date.
SG contributions unpaid or underpaid by the due date.
Any other contribution for example, employer contributions greater than the SG minimum contribution requirements or after-tax employee contributions mentioned in an award or industrial instrument to be made by a specified time that are not allocated to an employee’s superannuation fund’s bank account by the due date.
The amount of all other contributions unpaid or underpaid.
In these circumstances it would be up to an employer to demonstrate that the delay, underpayment or non-payment of contributions was beyond the employer’s control or was an inadvertent error.
Who can initiate actions under these provisions?
Action can only be taken by the Australian Federal Police and/or the Commonwealth Department of Public Prosecutions.
Commencement date
Although the rules themselves changed from 1 January 2024, the provisions themselves will commence on 1 January 2025.
What this difference in date will mean in practice is yet to be seen. It would seem that the charges cannot be laid until after 1 January 2025, but that they may be applied to any deemed wage theft from 1 January 2024.
GrowthLogic will continue with our rigorous reminders and assistance surrounding Superannuation Guarantee compliance.
If you need any assistance with meeting your compliance requirements – or if you have lodged or paid your superannuation after the due date, please let us know immediately so that we can assist with the lodgement of the Superannuation Guarantee Charge statement. Hannah is very experienced in this area and would love to help.