Currently, if an employee earns $450 or more in a month, generally you must also pay super guarantee. From 1 July 2022, you'll need to pay super guarantee contributions to an employee's super fund regardless of how much they are paid. This change comes about due to the Government (who were in power at the time in May 2021) announcing they would remove the current $450 minimum monthly salary and wage threshold to pay super guarantee. This change was made law by the Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Act 2021, with royal assent received on 22 February 2022.
As a result, from 1 July 2022, employers will be required to make super guarantee contributions to their eligible employees regardless of how much the employee is paid each month. Take note however that all other existing exclusions to be considered when paying super guarantee will still apply, for eg under 18s must still work for more than 30 hours per week to be eligible. Other exclusions are explained here.
This article will discuss the changes being made to the platform to reflect the SG eligibility change and how this change will affect existing employees and their current super threshold setting. The article is broken down into the following sections:
- Employee super threshold setting pre 1 July 2022
- Employee super threshold setting from 1 July 2022
- Will existing employee settings change from 1 July 2022?
- Undertaking an audit of employee super threshold settings
-
Manually updating employee super threshold settings
How is an employee's super eligibility threshold currently configured in the platform?
The Pay Run Defaults screen within every employee file has a "Super Threshold" setting as follows:
By default, the super threshold amount for every employee is set at $450. This default value can be overridden by clicking on the 'Override' checkbox and entering a different value, as follows:
Please note: the default value and override functionality are identical whether you create or update an employee via the UI, API or by importing the employee data.
Interaction with pay rate templates and super threshold setting
Where an employee is attached to a pay rate template, the super threshold amount attached to the employee is governed by the pay rate template itself and thereby cannot be overridden at an employee level (example screenshot below where there is no 'Override' checkbox):
The super threshold amount can only be edited from the pay rate template itself and then whatever change is made to the pay rate template will flow through to all employees attached to that template. Further details on pay rate templates can be found here.
How will the employee's super threshold setting be configured in the platform from 1 July 2022?
The main difference from 1 July 2022 is that, by default, there will be no super threshold (ie $0) applied when adding a new employee. How existing employee settings will be affected are discussed further below.
The default super threshold setting, which will still be located in the employee's Pay Run Defaults screen, will display as follows:
When the 'Apply a threshold amount' checkbox is not ticked, this conveys that the employee does not have a super threshold amount and so will be paid SG contributions on all OTE earnings regardless of the employee's total monthly earnings amount. For eg, if an employee was paid a total of $400 gross in May 2022 there would be no super payable on this amount (because the employee did not make enough to reach the minimum $450 threshold). From July 2022 and onwards, if the employee earned $400 gross (OTE) in the month then they would be paid super on that total amount (because there is now no minimum monthly eligibility threshold).
In circumstances where the employee still needs a threshold applied, tick the 'Apply a threshold amount' checkbox and then enter what the threshold amount is, for eg:
Using the above screenshot as an example, the result of this setting is that an employee will only be paid super contributions on their OTE earnings once the employee has earned $20000 in the month. If they earn $15000 in the month, then no super will be paid to that employee.
The override functionality should only be used for employees where no super is to be calculated on their earnings at all, for eg high income earners who have opted out of super or self-employed who choose not to be paid super, and who share pay categories with employees that are eligible for super. If these employees do not share pay categories with eligible employees and the pay category 'Super rate' field has a value of "0" then there will be no need to set a super threshold amount in the employee's Pay Run Defaults screen.
Please note: the default value and override functionality will be identical whether you create or update an employee via the UI, API or by importing the employee data.
What threshold setting should be applied for employees under the age of 18?
Although the $450 monthly eligibility threshold has been removed for employees under the age of 18, the eligibility criteria of working more than 30 hours a week remains. The platform will continue to check the weekly hours, when processed in the pay run, to determine whether super is owed to the employee. As such, you must ensure that the 'Apply a threshold amount' checkbox is not ticked for employees under the age of 18 as this will result in an underpayment of super contributions.
Interaction with pay rate templates and super threshold setting
As stated in the above section, employees attached to a pay rate template cannot override the super threshold amount at an employee level. Rather, this will need to be edited from the pay rate template itself. An example of an employee whose super setting cannot be overridden because they are attached to a pay rate template is as follows:
Will existing employee settings change from 1 July 2022?
Only employees that meet a defined set of criteria will have their super setting automatically updated by the system so no SG threshold is being applied for any pay runs with a date paid of 1 July 2022 and onwards. The following scenarios will provide clarification on whether the system will automatically update employee settings or not:
- The existing 'Super Threshold' field in the employee's Pay Run Defaults has not been overridden and displays a value of $450
- The employee is attached to a pay rate template assigned to the pre-packaged Hospitality Industry (General) Award 2010 or Restaurant Industry Award 2020
- The existing 'Super Threshold' field in the employee's Pay Run Defaults has been overridden and displays a value of $0
- The existing 'Super Threshold' field in the employee's Pay Run Defaults has been overridden and displays a value other than $0
(For clarity, and to avoid repetition, when making reference below to "SG will be calculated on all employee earnings, regardless of the amount" this only pertain to earnings (pay categories) where an SG rate is payable and also takes into account that an employee under the age of 18 must work over 30 hours a week to qualify for SG.)
Scenario A: The existing 'Super Threshold' field in the employee's Pay Run Defaults has not been overridden and displays a value of $450
In this scenario, the system will automatically update the employee's super setting to have no super threshold from 1 July, as follows:
This means that for all pay runs with a date paid of 1 July 2022 and onwards, SG will be calculated on all employee earnings, regardless of the amount.
Scenario B: The employee is attached to a pay rate template assigned to the pre-packaged Hospitality Industry (General) Award 2010 or Restaurant Industry Award 2020
The Hospitality Award and the Restaurant Award both provide a lower threshold for salary or wages to be taken into account for the purposes of SG, being $350 per month. A determination was made on 1 June 2022 that the clause in both awards that refers to this lower threshold will be removed. This means that employees covered by these awards will also have no monthly eligibility threshold effective from 1 July 2022.
Where:
- a business has installed either the Restaurant Award or Hospitality Award (as part of the platforms pre-packaged Awards library); and
- an employee within that business is attached to a pay rate template included in either pre-packaged Award,
then the system will not automatically update the employee's super setting. Rather, an award update will be made available and a notification published on each affected business' dashboard by 1 July 2022. This update will include the removal of the SG monthly threshold amount. Once the update is installed, which should only be done once the final pay run for the 21/22 FY has been finalised, this will update the employee's super setting to have no super threshold applied for any pay runs with a date paid of 1 July 2022 and onwards.
To be clear, if a business has created and assigned their own pay rate template(s) to employees, the super threshold setting will need to be managed by the business. Installing an award update will only update settings for pay rate templates that are linked to the pre-packaged Award. To know, at a glance, whether employees are attached to a business created pay rate template navigate to Payroll Settings > Pay Rate Templates > 'Your pay rate templates' (dropdown). This will show you what business created pay rate templates exist, if any, and how many employees are linked to the templates:
Scenario C: The existing 'Super Threshold' field in the employee's Pay Run Defaults has been overridden and displays a value of $0
In this scenario, the system will basically retain the employee's super setting of having no super threshold but the setting display will update from 1 July to look as follows:
This means that for all pay runs with a date paid of 1 July 2022 and onwards, there will continue to be no threshold and SG will be calculated on all employee earnings, regardless of the amount.
Scenario D: The existing 'Super Threshold' field in the employee's Pay Run Defaults has been overridden and displays a value other than $0
In this scenario, the system will not automatically update the employee's super setting but will rather retain the SG threshold amount that currently applies to the employee. The reason the system will not remove the SG threshold is because it would be unsafe to assume it should be removed!
As an example, if the 'Override' checkbox of an employee's super threshold setting is ticked and the threshold value entered is $450, the setting display will update from 1 July to look as follows:
Additionally, all pay runs with a date paid of 1 July 2022 and onwards will continue to apply the $450 minimum threshold when calculating SG on this employee's earnings.
Another example would be where the 'Override' checkbox of an employee's super threshold setting is ticked and the threshold value entered is $0.10, the setting display will update from 1 July to look as follows:
Additionally, all pay runs with a date paid of 1 July 2022 and onwards will continue to apply the the minimum threshold of $0.10 when calculating SG on this employee's earnings.
In this instance, the employee's super threshold setting will need to be updated manually. Guidance on how this can be done is explained in the section below.
Undertaking an audit of employee super threshold settings
In order to ensure your employees' super threshold settings will be correct from 1 July 2022, we strongly suggest you undertake an audit of your payroll data. The easiest way to do this would be to export the employee data and then follow these steps:
- Navigate to the 'SuperThresholdAmount' column contained in the employee export
- Filter the above column to remove any blanks or '0' values (the reason for this is because the system will automatically update the super threshold settings for anyone with these values, as per Scenario A and Scenario C):
- For any employees with a value of '350' you should check whether the employee falls under Scenario B. If the employee is assigned to a pay rate template linked to either the Hospitality or Restaurant Award, then you just need to wait till the applicable Award update is published to install the update only once all 21/22 FY pay runs are finalised and closed off. If the employee is assigned to a business created pay rate template then take note of these employees as they will need to be manually updated. Guidance on how this can be done is explained in the section below.
- Lastly, for any employees with any other value you should double check their situation and what their threshold should be, if any, from 1 July 2022. If changes are needed to be made refer to the options in the next section on how this can be done.
Manually updating employee super threshold settings
This section is only relevant where an employee's super threshold setting will need to be manually updated because the system will not make an update automatically. Before we run through the ways to manually update employee details, it is essential that the update is only done after the last pay run for the 21/22 FY has been processed and finalised and no further pay runs for that financial year are required for the affected employee(s). Additionally, the update must be done before the first pay run with a date paid of 1 July 2022 or onwards is created.
There are multiple ways you can update an employee's super setting, depending on your scenario/preference:
- You can individually update the value contained within an employee's 'Super Threshold' field by navigating to the affected employee's Pay Run Defaults screen, unticking the 'Override' / 'Apply a threshold amount' checkbox and then clicking on 'Save'.
- You can choose to bulk update the 'Super Threshold' field if there are several employees that need to be updated. To do this, export the employee file, navigate to the 'SuperThresholdAmount' column and enter "0" (ie the number zero and without the apostrophes) against any affected employee. Then import the updated version of the file.
- If employees are attached to pay rate templates that are linked to either the Hospitality or Restaurant Awards and so need the $350 threshold removed, click on "apply the updates" once the award update notification is published on the business' dashboard.
- If employees are attached to business created pay rate templates, the 'Super Threshold' field in the pay rate templates themselves will need to be updated as opposed to within the employee file. To do this, go to Payroll Settings > Pay Rate Templates > click on "Export" and then "Download" (ensuring that the 'Pay rate templates' selection = 'Your pay rate templates' > navigate to the 'SuperThresholdAmount' column in the export and delete the value contained in the cell so that the cell is blank. Then import the updated version of the file.