Staying up to date with the latest legislative changes can be tricky, so we’re here to bring you the latest updates regarding the Superannuation Guarantee (SG) and the national minimum wage. These updates not only benefit employees by reducing financial pressure on the pension and improving retirement outcomes, but also present opportunities for employers to streamline processes and enhance compliance.
We're here to guide you through these changes and share solutions to ensure you stay compliant, reducing the risk of underpaying superannuation and ensuring seamless payroll processing. Get ready to embrace these positive changes and unlock the full potential of your workforce!
What’s changing?
Superannuation Guarantee Increase to 11%
The Superannuation Guarantee (SG) is set to undergo an exciting update that will take effect from July 1, 2023 — the rate will increase from 10.5% to 11%. This increase is a significant step towards reducing financial pressure on the Age Pension and improving financial outcomes for retirees. By contributing a higher percentage of their earnings to superannuation, employees can secure a stronger retirement nest egg and enjoy greater financial security in their golden years.
How will this look in terms of the employee’s total pay package? As an example, if the Employment Contract states the salary as $100,000 plus superannuation, the overall package will increase to $111,000. If the Contract states the salary as $100,000 including superannuation, the total take home package will decrease.
National Minimum Wage Increase
In addition to the Superannuation Guarantee (SG) increase, the national minimum wage in Australia has also been updated, rising to $23.23 per hour or $882.80 per week. This adjustment reflects the commitment to fair compensation for employees and acknowledges their invaluable contributions to the workforce. The increase in the national minimum wage not only enhances living standards but also supports a thriving workforce and promotes economic growth.
Future change: Payment of SG on Payday
Employers in Australia pay salary and wages in various frequencies, such as weekly, fortnightly, or monthly. Starting from 1 July 2026, employers will be obligated to make superannuation payments on the same day as the pay frequency, ensuring timely contributions aligned with employee wages.
How will these changes affect employers?
The upcoming changes to the Superannuation Guarantee (SG) and the national minimum wage have important implications for employers across Australia. It's crucial to understand how these changes will affect your organisation and to be prepared to adapt to the new requirements. Let's explore the key ways in which employers will be impacted by these updates.
Financial Responsibility:
With the increase in the SG rate from 10.5% to 11%, employers will need to allocate a slightly higher percentage towards superannuation contributions. This increase represents a financial responsibility for employers, as they are required to ensure that the correct amount is contributed to their employees' superannuation funds each quarter.
Compliance Obligations:
Employers have a legal obligation to comply with the updated SG rate and national minimum wage. Failing to meet these obligations can result in penalties and legal consequences. It's important to be prepared by reviewing your current payroll processes and ensuring they align with the new requirements. This includes setting up the new SG rate in your current systems and automating the calculations for superannuation contributions and wages, according to the updated rates.
Employee Relations and Retention:
The changes to the SG and national minimum wage can have a significant impact on employee relations and retention. By ensuring compliance and accurately reflecting the new rates in employee compensation, you show your commitment to fair and equitable processes. This enhances employee morale, job satisfaction, and loyalty.
What can you do to manage these changes?
Successfully managing the upcoming changes to the Superannuation Guarantee (SG) and the national minimum wage is crucial for employers to ensure compliance and maintain smooth operations. While there are various approaches to handling these changes, here is a handy checklist that will help you navigate the updates with ease.
1. Update Payroll Systems
One of the first steps to manage the changes is to update your payroll systems. Ensure that your payroll software or processes reflect the new SG rate and national minimum wage. This involves adjusting the calculations for superannuation contributions and employee wages to align with the updated rates. Regularly review and test your payroll systems to ensure accuracy and compliance. Automating this process where possible will ensure that your payroll system is completely accurate, and mitigates the risk of having to correct payments retrospectively.
2. Communicate with Employees
Transparency and open communication play a vital role in managing changes effectively. Inform your employees about the updates to the SG rate and national minimum wage, explaining how it impacts their superannuation contributions and wages. Clear communication fosters trust and ensures that employees are aware of their entitlements.
3. Review Employment Contracts and Policies:
Take the opportunity to review and update employment contracts and policies to align them with the new rates. Ensure that the language and terms reflect the updated SG rate and national minimum wage. This helps maintain consistency and avoids any discrepancies or confusion in the future.
4. Utilise Purpose-Built Technology
Leveraging purpose-built technology can significantly streamline the process of managing the changes to the Superannuation Guarantee (SG) and the national minimum wage. The OneAdvanced Time and Attendance solution is specifically designed to simplify compliance management and make these updates a breeze. Here's how it can benefit your organisation:
- Automated Compliance Adjustments — Our Time and Attendance software automates the necessary compliance adjustments according to the updated SG rate and national minimum wage. Additionally, the software has award interpretation built in — this means you’re not only covered now, but also when legislation changes in the future.
- Simplified Time Tracking and Attendance — You can reduce the risk of error and simplify the submission, tracking and management of attendance, all in one unified platform. This will allow you to achieve accurate results and reduce the amount of physical admin through the time capture functionality.
- Accurate and Reliable Calculations — With our software, you can rest assured that superannuation contributions and wages will be accurately calculated and processed based on the updated rates.
- Efficient Payroll Processes — By utilising our Time and Attendance solution, you can optimise overall efficiency in your payroll processes. The streamlined compliance management frees up time and resources, allowing you to focus on strategic initiatives and driving business growth.
Final Thoughts
These changes not only present compliance obligations but also an opportunity to enhance employee relations, attract top talent, and foster a positive work environment. By embracing the updates and employing efficient tools and strategies, employers can navigate these changes while prioritising their employees' financial well-being.
At OneAdvanced, we understand the complexities involved in managing these changes, and our Time and Attendance software is here to simplify the process. Stay compliant, streamline payroll operations, and focus on driving your organisation's success by getting in touch with the team today!