There is no shortage of employers who try to avoid paying super.
They might decide not to pay because the employee works on a casual or part-time basis, or because they prefer to represent the worker as a contractor, not an employee.
To be eligible for super, you must be working full time, part time or on a casual basis and be paid more than $450 a calendar month. If you are younger than 18, you must meet the additional requirement of working more than 30 hours a week.
If you are eligible, your employer must contribute 9.5% of your “ordinary time” earnings into your super fund. Most employers make the payment fortnightly or monthly and by law the employer must make the super contribution at least quarterly, by the 28th day after the end of the quarter.
So what can you do if your employer hasn’t been paying your super?
First, raise it with your employer. If that fails, take your complaint to the tax office. Strength in numbers helps, so check whether others have been affected.
Colin Lewis, head of strategic advice at Perpetual Private, says there are a few reasons employers fail to make contributions: they might be struggling with cash flow or unaware of their obligations or believe that if they call their employee a contractor they can avoid paying contributions.
“In a lot of cases they will treat employees as contractors and not pay the super guarantee and say it’s the contractor’s responsibility,” he says.
“The issue with that is, if the contract is predominantly for labour, they still have to pay the 9.5% SG. If they haven’t, then that’s when the employer incurs the super guarantee charge, which effectively represents the contribution they should have paid, plus interest, plus penalty.”
Lewis recommends you go to the tax office website, which has a special tool that will help you establish whether you are truly a contractor.
“If you do come up as an employee, then you need to have the conversation with your employer and say, ‘I believe there’s an obligation for you to be paying my super’. A lot of employers don’t like having the ATO getting involved in their affairs. That’s when many employers will come to the party and do what they are supposed to do.”
He recently helped two family members get their super entitlements.
In one case the employee was incorrectly treated as a contractor and the employer addressed the issue once it was raised. The other case went to the ATO.
“The employer ended up being audited and they ended up paying the SG charge, which is far more costly to the employer than paying the SG in the first place,” says Lewis.
Having an employment contract does not mean you are a contractor. Here are some of the myths about what makes someone a contractor:
• ’Having an ABN makes you a contractor.’ It doesn’t – it makes no difference.
• ’Casual, temporary or infrequent work.’ Length or regularity of work makes no difference.
• ’Invoicing for the work.’ It doesn’t automatically make you a contractor.
• ’The worker’s contract says so.’ If a worker is legally an employee, a document saying the worker is a contractor doesn’t change it.
• ’It’s a common industry practice.’ That doesn’t mean it’s right.
Broadly, if the employer has control over the work you do and the way you do it, pays you for the time you have worked, provides most of the equipment and takes all the commercial risks for the business, you are an employee, not a contractor.
The tax office’s employee-contractor tool can help you determine whether or not you are a contractor. The site also provides the documentation you need to lodge a complaint.