In its May budget statement, the Federal government announced the resumption of the legislated program to gradually increase the compulsory Superannuation Guarantee rate from 9.5% to 12% by 2025.
The resumption of the program will see the compulsory employer superannuation rate increase from the current 9.5% to 10% on 1 July 2021. This means that from 1 July this year, employers will be required to make superannuation contributions on behalf of employees at the rate of 10% of the employee’s ordinary time earnings.
An employee’s ordinary time earnings upon which superannuation contributions are calculated, includes not only wages and salary but commission and bonus entitlements. Subject to how the employee’s employment contract is constructed, it may be possible to absorb the superannuation increase into existing contractual arrangements. However, it is important that professional advice is sought prior to taking steps for any such absorption.
REEF can provide its members with guidance on this complex matter.
To assist members communicate the change that the superannuation increase will have on commission entitlements, REEF has prepared two template Memos that can be issued to an employee affected by the change. One template is applicable to employees on either a debit-credit or target based commission structure. The other relates to commission-only employees. Please login to the REEF People Management System to access these templates.