Is Your Business Paying Super Guarantee to the Right People?

The Superannuation Guarantee (SG) system in Australia is designed to ensure that workers receive adequate retirement savings from their employers. However, as the rules governing SG have evolved, so too has the definition of who qualifies as an employee. Businesses across the country need to stay ahead of these changes to ensure that they’re meeting their legal obligations and avoiding costly mistakes.

As of the most recent updates to the Superannuation Guarantee system, the definition of who is entitled to superannuation has expanded. It’s not just your typical full-time employees who need to be considered for SG contributions — certain casual workers, contractors, and even some part-time workers may now be entitled to superannuation payments.

At Worldwide Advisory, we specialise in helping businesses navigate these evolving regulations. In this blog, we’ll explain the expanded definition of an employee under SG rules, clarify who is entitled to superannuation, outline which workers might be excluded, and provide practical steps your business can take to ensure compliance. Most importantly, we’ll show how Worldwide Advisory can help your business get it right, avoid penalties, and stay compliant.

Understanding the Expanded Definition of an Employee under SG Rules

Historically, the Superannuation Guarantee obligations were limited to employees who worked a certain number of hours or were considered permanent staff. However, recent changes to the legislation have expanded the scope to include a wider range of workers. Let’s break down who is now considered an employee and what this means for your business.

1. Full-Time and Part-Time Employees

Full-time employees have always been eligible for SG contributions, as have part-time employees, provided they meet the earnings threshold. However, businesses must ensure that part-time employees who earn over the minimum income threshold (currently $450 per month) are receiving SG contributions.

2. Casual Employees

Casual workers used to be excluded from SG obligations unless they worked regular hours or met certain income thresholds. With recent updates, casual employees who earn over the minimum income threshold are now entitled to SG contributions, regardless of the irregularity of their hours. This is an important shift that businesses in hospitality, retail, and other sectors with casual workforces must recognise.

3. Contractors

In some cases, contractors who work under a contract that is wholly or principally for their labor are now classified as employees for SG purposes. Contractors who are paid under a labor-only contract or are treated similarly to employees may be entitled to receive SG contributions, especially if they meet the earnings threshold.

• What this means for your business: If you hire independent contractors, you need to review your contracts and payment structures carefully. If the contractor is, in fact, a "deemed employee," you must provide superannuation for them.

4. Workers Earning Less Than $450 per Month

Under the new rules, employees earning less than $450 per month no longer automatically qualify for SG contributions. However, businesses need to ensure they’re accurately tracking the income of their employees to avoid overlooking anyone who might qualify for superannuation under other classifications or working arrangements.

Who Might Be Excluded from Receiving Superannuation Contributions?

While the new rules have expanded the number of workers entitled to SG, there are still categories of workers who may be excluded from receiving superannuation. It’s essential to identify these exclusions to ensure that your business is not making unnecessary contributions or missing out on required payments.

1. Employees Under 18 Years of Age

If a worker is under the age of 18, they must work more than 30 hours a week to be eligible for SG contributions. Workers under 18 who work fewer than 30 hours per week are excluded from receiving superannuation.

2. Employees Earning Below the Minimum Threshold

Employees who earn less than $450 per month are not eligible for SG contributions. However, businesses should track their employees' earnings carefully to avoid overlooking individuals who are close to the threshold and might become eligible if their earnings increase.

3. Foreign Workers with Temporary Visas

Workers who hold temporary visas may be excluded from superannuation, depending on the specifics of their employment. However, many workers on temporary visas are still eligible for superannuation under certain circumstances, and businesses should confirm this by reviewing the visa conditions of these workers.

Steps Your Business Can Take to Ensure SG Compliance

With the expanded definition of “employee” and the evolving rules around SG contributions, it’s crucial for businesses to take proactive steps to ensure compliance. Here are the essential actions businesses should take to avoid mistakes and potential penalties:

1. Audit Your Workforce

The first step is to conduct an audit of your entire workforce. Identify which workers are eligible for superannuation based on their employment type, earnings, and visa status. This may require revisiting contracts for casual and contractor workers and ensuring all employees are classified appropriately.

• Tip: Don’t rely on old assumptions or previous payroll systems. With the changes to the SG rules, it’s important to ensure that all workers are correctly classified and that super contributions are made accordingly.

2. Update Your Payroll System

Once you’ve identified eligible workers, you must ensure that your payroll system is capable of processing SG contributions for everyone who qualifies. This may require updating your payroll software or adopting new systems to track superannuation for casual workers, contractors, and part-time employees.

3. Review Employment Contracts

It’s also important to review the employment contracts of your workers, especially for contractors and casual employees. Verify whether any contractors or casual employees meet the criteria for SG contributions and update their contracts if necessary.

4. Keep Detailed Records

Ensure that your business keeps accurate records of all SG payments, including the amounts contributed and to whom. This is crucial for compliance and will help protect your business in case of audits or disputes.

5. Seek Expert Guidance

Navigating the complexities of SG contributions can be challenging, especially as the rules have expanded and evolved. Working with a trusted expert can ensure that your business stays on top of all the latest updates. This is where Worldwide Advisory comes in.

How Worldwide Advisory Can Help Your Business Stay Compliant

At Worldwide Advisory, we understand the intricacies of the Superannuation Guarantee system and can help your business ensure full compliance with the law. Here’s how we can assist:

1. Workforce Classification Review

Our experts will conduct a thorough review of your workforce to determine who is eligible for SG contributions. We’ll ensure that all employees — including part-time, casual, and contractor workers — are correctly classified and that superannuation contributions are made where required.

2. Payroll System Integration and Advice

We’ll help you update or implement payroll systems that accommodate the new SG requirements, ensuring that superannuation contributions are automatically calculated and processed for all eligible workers. We also provide guidance on how to correctly track and manage SG payments.

3. Compliance Monitoring

Once your system is in place, we’ll help you monitor ongoing compliance with SG obligations, ensuring that your business remains up to date with any future changes to the superannuation rules.

4. Risk Management and Penalty Avoidance

Our team will work with you to mitigate the risk of non-compliance, advising you on how to avoid penalties and charges for missed or incorrect SG contributions. By ensuring that all employees are classified correctly and super contributions are paid on time, we help safeguard your business against potential fines.

Stay Ahead of the Changes and Get SG Right

The expanded definition of an employee under the Superannuation Guarantee rules brings new challenges for businesses, but it also provides an opportunity to ensure that your workers are being fairly compensated for their future. By conducting a thorough workforce audit, updating your payroll systems, and seeking expert advice, you can avoid costly mistakes and stay compliant with the law.

Worldwide Advisory is here to help you navigate these complex changes and ensure your business is meeting its superannuation obligations. Contact us today to learn more about how we can help you manage SG compliance and avoid penalties.