Employees short-changed on super crackdown

21 Jul 2020

Posted February 02, 2018

The Federal Government’s proposed new laws to protect superannuation entitlements don’t go far enough to help workers recover billions of dollars in retirement savings, according to NXT MP Rebekha Sharkie.

“While the Nick Xenophon Team welcomes the fact that the Government is finally paying attention to this issue after we introduced our own Private Member’s Bill last year to try and fix the problem, we feel the Government’s draft legislation fails to give employees any real power to fight for their own money,” said Rebekha, the Federal Member for Mayo.

“We would like to see workers given the right to pursue their unpaid super through the courts if they need to, or at least give the Fair Work Ombudsman the same powers to recover superannuation as they do unpaid wages.

“Giving the Australian Tax Office (ATO) Commissioner the power to direct an employer to pay overdue super, and imposing stiff penalties for repeat offenders, is a positive step in the right direction but it doesn’t go far enough.

“The feedback we’ve had to date from affected employees and the super industry is that the ATO process is ineffectual and the Office has had a poor track record in recovering unpaid Superannuation.”

According to Industry Super Australia and Cbus there are at least 2.4 million workers in Australia who have been underpaid their super entitlements by about $3.6 billion.

That figure is expected balloon out to $66 billion by 2024.

Financial Service Minister Kelly O’Dwyer released the draft Treasury Laws Amendment (Taxation and Superannuation Guarantee Integrity Measures) Bill 2018 on January 24 for public comment.

Industry groups and the wider community have until February 16 to make submissions.

The proposed Bill seeks to implement some of the recommendations from the Superannuation Guarantee Cross-Agency Working Group relating to unpaid super and super payment compliance.

If adopted, the Bill would:

  • Allow Commissioner of Taxation to issue directions to an employer who fails to comply with their obligations;
  • Direct an employer to undertake an approved educational course relating to their Superannuation Guarantee obligations;
  • Enforce fines for employers who repeatedly fail to pay entitlements with the maximum penalty for recalcitrant offenders being 12 months’ imprisonment.

Rebekha introduced NXT’s Fair Work Amendment (Recovering Unpaid Superannuation) Bill 2017 as a Private Members Bill in September 2017.

Industry Super Australia, Cbus and the Australian Institute of Superannuation Trustees all welcomed the Bill’s intent to align employees’ super entitlements with wage payment regulations.

NXT’s Bill sought to strengthen the operation of Australia’s superannuation system through a number of provisions by:

  • Including superannuation contributions within the National Employment Standards. This would give the Fair Work Ombudsman the authority to pursue recovery of unpaid employer superannuation contributions. Employees would also have a direct legal avenue to recover unpaid superannuation;
  • Enabling employees to more effectively track if and when superannuation contributions are made to them by their employers, by requiring employers to provide notice of when contributions are made (or not paid) for each pay period;
  • Removing the loophole which currently allows employers to potentially claim employee contributions made via salary-sacrifice as employer contributions;
  • Removing the exemption that currently exists for employers that allows them to not to make superannuation contributions to employees who are paid less than $450 in wages in a calendar month;
  • Requiring the Commissioner for Taxation to conduct a review of employers’ compliance with their superannuation payment obligations.

“A total of 12,896 workers were underpaid superannuation in Mayo in 2016, missing out on an average $1748 per person per year. That is almost one-third of all workers in my region who were underpaid!” Rebekha said.

“Any legislation adopted by this Government needs to give employees more power to pursue unpaid superannuation contributions and get earlier warnings when employers fail to pay.”

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