Latest Changes to Superannuation in the National Employment Standards

The landscape of employee entitlements in Australia has seen a significant update with the recent enactment of the Fair Work Legislation Amendment (Protecting Worker Entitlements) Act 2023. This pivotal legislation has introduced a new dimension to the National Employment Standards (NES) by incorporating a specific provision for superannuation rights.

Previously, employers were mandated to contribute to their employees' superannuation funds to avoid the superannuation guarantee charge as stipulated by the Superannuation Guarantee Charge Act 1992. The latest amendment to the Fair Work Act 2009 fortifies this requirement by embedding it within the NES. This integration ensures that adherence to superannuation laws is synonymous with compliance with the NES, thereby simplifying the obligations for employers.

The inclusion of superannuation within the NES is a strategic move to provide a broader spectrum of employees with a legally enforceable superannuation claim. Before this amendment, only those employees under a modern award or enterprise agreement with specified superannuation contributions could seek legal recourse, including the option to file a claim in the small claims court. Now, the scope of protection is extended, allowing more workers to assert their right to superannuation, with the possibility of enforcement by employee organizations or Fair Work Inspectors.

Implications of the Legislative Update

The scope of employees who can now legally challenge unpaid superannuation has broadened significantly. This means that a greater number of employees within the national system can approach the courts to address issues of unpaid superannuation.

While the Australian Taxation Office (ATO) retains the primary role of overseeing compliance with the superannuation guarantee and related duties, employees are expected to continue reporting any discrepancies in superannuation payments to the ATO. The Fair Work Ombudsman will maintain its capacity to refer cases of unpaid superannuation to the ATO and, where necessary, will act in a supportive capacity to the ATO by addressing unpaid superannuation under the new NES provision, as well as under the terms of modern awards, enterprise agreements, or other industrial instruments.

Employees are precluded from seeking recovery of unpaid superannuation through the courts if the ATO has already initiated legal action to reclaim those specific unpaid amounts.

Commencement of the New Provisions

The revised provisions have taken effect from 1 January 2024. This commencement date is strategically chosen to coincide with the quarterly schedule that employers must adhere to for making superannuation contributions on behalf of their employees, as required by superannuation legislation to avoid the superannuation guarantee charge. This synchronization ensures a seamless transition and adherence to the updated legal framework for both employers and employees.

For more information on the Protecting Worker Entitlements package visit: www.dewr.gov.au/protecting-worker-entitlements

Scott Bailey, Senior Director and Head of Tax Accounting at ITP Accounting Professionals

Scott’s core beliefs of honesty, integrity and transparency in business and tax affairs underline his day-to-day business philosophy as a senior director of ITP Accounting Professionals. Relaying accurate and up to date information to Franchisors, individuals and small business clients, Scott reduces tax obligations and increases profit. ?Scott also interprets new and updated tax laws, and regulations to write the ITP tax course to help individuals become responsible and successful tax professionals.