Australian companies making workers pay for super rise cutting their take home pay

From July 1, some employees are going to be hit with a superannuation rise which will come out of their salary, cutting their take home pay.

Workers from major Australian companies, including Telstra, AGL and ANZ, will have their take home pay cut when an increase to superannuation payments kicks in on July 1.

The superannuation contribution, which is compulsory for employer’s to contribute to staff’s retirement funds, is rising from 9.5 per cent to 10 per cent from July 1.

Whether workers are impacted depends on the type of employment contract they are on. Some employers include superannuation as part of an employee’s total package, while others pay super contributions on top of the base salary.

It’s the first group of people that face taking home less pay come July 1 as it’s legal for a company to take money out of base pay if it’s included in their total package.

There’s is one exception — employee’s take home pay can’t drop below the minimum wage outlined in an award or contract if superannuation is being taken out of it.

Some staff have received emails or letters from their employers revealing that the superannuation rise will be taken from their base pay, meaning an effective salary cut.

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It depends on the type of contract you are on as to whether the changes could impact on you. Picture: Supplied

Why increase is being passed on

Telstra is one company that has earmarked that some employees will be affected. A Telstra spokesman said only senior management would be impacted by the rise in superannuation, which is about 5 per cent of their workforce.

“Employees who aren’t in senior management roles have been receiving a minimum of 10 per cent superannuation for more than five years,” he told news.com.au.

Telstra’s enterprise agreement applies to all employees in Australia who aren’t in senior management roles, with the 10 per cent superannuation included since 2015, he added.

“For our senior managers and executives not covered by the EA, their super contribution of 9.5 per cent will increase to 10 per cent from 1 July in line with the new legislation,” he said.

“This group represents around 5 per cent of our overall workforce and their overall fixed remuneration will remain unchanged.”

Some AGL staff received an email last week that flagged the salary change with superannuation contributions increasing and the base pay “slightly decreasing”, it said.

“For most of you, this increase to your superannuation contributions will mean a change to your take home pay of around $4 to $8 per week,” the email said.

“For those with a base salary range of $160k to $234k (the Maximum Earnings Base for superannuation contributions), the change will be around $9 to $12 per week.”

An AGL spokeswoman said the company undertakes a careful assessment of market trends, business conditions and company results to determine how the increase to the superannuation guarantee contribution will be applied.

“In 2013, the increase was absorbed by AGL, whereas in 2014, the increase was absorbed by our total fixed remuneration employees,” she noted.

“The recent increase will affect AGL employees differently, based on their remuneration provisions and type of superannuation fund.”

She added that AGL is working closely with all employees to ensure they understand this change by providing virtual information sessions and employee communications.

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All Aussies will take home more superannuation from July 1. Picture: Supplied

ANZ bank was another company that sent letters to staff informing them that their take home pay could be “reduced slightly”.

The company carefully weighed up the implications of the superannuation increase, based on a number of factors, an ANZ spokesman said.

“It’s important to note this will not impact take-home pay for the majority of our branch staff and contact centre people. The staff affected are our more senior employees in head office roles,” he said.

“An employee on $100,000 a year will see a reduction in their after-tax salary of $10 a fortnight. This amount will be paid to their chosen superannuation at a lower tax rate of 15 per cent, giving an after-tax increase of $13.60.”

He added that the ANZ also follows a 30 September year end, which separates the date of the superannuation guarantee increase from their own pay review cycle.

“ANZ will ensure any external factors, such as the superannuation guarantee changes, are considered as part of the annual performance and remuneration process later in the year,” he noted.

“A core part of our remuneration framework is also a commitment to ensuring that it is fair and equitable for our global workforce, which is spread across more than 30 countries.”

According to ACTU president Michele O’Neil workers have already suffered from record low wages in the last eight years. Picture: iStock

Check your contract

The practice of forcing workers to fund the superannuation increase out of their own pocket by reducing their pay is illegal for the vast majority of Australian employers, warned

ACTU president Michele O’Neil.

“There are a very narrow set of circumstances where individual contracts are structured in a way which allows this,” she told news.com.au. “If your employer is suggesting that this is what they plan to do from July you should contact your union.”

The superannuation guarantee is increasing because currently workers don’t have enough retirement savings to live on once they retire, she added.

“But workers are also suffering after more than eight years of record low wage growth. This cannot be an either/or proposition. Workers need a wage rise and an increase to super,” she said.

“Profits have seen record growth through the pandemic, it’s time for employers to pass that on to the workers who carried us through the crisis ... This is a risky strategy for employers to consider and other major employers that have tried this in the past have been stung.”

More superannuation increases have also been flagged in the future, with a rise of 0.5 per cent each until, until the rate reaches 12 per cent by 2025.

The rise comes as super funds claim new laws that would “staple” workers to a single fund could cost workers up to $230,000 over the course of their working lives.

The new laws, to be debated in the Senate this week, are designed to address the issue of Australians ­accruing multiple super accounts as they change jobs by “stapling” a member’s account to them as they move between employers.