If you’re planning to start a business in Australia, then you’ve probably been having a lot of grand visions about your innovative products, world-class service, and of course that shiny new executive office. These are all great things to aspire to, but it’s important not to neglect the other important factors of being an employer. One of the things you’ll have to sort out is your workers’ superannuation funds. Here are some of the important regulations you need to be aware of.
First of all, you’re going to have to adhere to the superannuation guarantee. This guarantee, sometimes simply called the “super guarantee” is a compulsory contribution you have to make on behalf of your eligible employees. It’s paid directly to each worker’s nominated fund or a default fund on their behalf. If you employ a single member of staff, then it’s almost certain that you’ll have to make superannuation guarantee contributions. The value of the contributions themselves is a fixed rate. The government sets a percentage of employees’ regular income which you have to contribute, which is currently 9.5%. While all employers are required by law to make contributions every quarter, most companies make the process easier by doing it at the same time they pay staff wages. There are various services such as Nationwide which also work to simplify the process.
Another important regulation means that in most cases you have to let your employees choose their own superannuation fund. However, there are certain exceptions to the rule which your business may qualify for. If the terms of the employment are governed by an industrial instrument, such as a workplace agreement, which specifies the fund into which you have to pay contributions. The employee may also be a member of a “defined benefit fund”. Certain workers who part-time as public sector employees will also excuse you from paying their superannuation contributions. When you hire a new worker, they may specify the superannuation fund they want you to use, or leave the decision up to you.
Finally, the law surrounding superannuation states that you’re not allowed to try to influence the employee’s choice of superannuation fund. You may have looked through the various funds which your employees are likely to choose, and seen certain benefits in one plan over another. However, if you don’t have a Financial Services License, you’re not allowed to give your employees any information relating to a fund, other than information pertaining to the default fund. It’s all down to the employee to find out how to join a fund, find product information, disclosure statements and so on, and to fill out all their membership applications in the right way. The best you can do, I’m afraid, is tell your employees about government websites which will allow them to compare different superannuation funds. This regulation works both ways, and your employees are prohibited from influencing your choice of fund.
While these regulations are important to understand, the law relating to superannuation goes much further. Do your own research, and cover yourself thoroughly!
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