Max Brenner experience proving less indulgent for employees

Written by Rachel Hunter, Relationship Manager at Quill

On Monday 8 October, chocolate chain Max Brenner closed 20 out of 37 Australian stores.

Administrators McGrathNicol Partners were appointed on 28 September by the company’s directors, reportedly due to rising costs and tighter retail trade.

However, some of the 600 employees, including supervisors, allegedly did not find out they had been made redundant until they read about it on news sites and social media.

On top of this, some employees claimed they only recently discovered Max Brenner had not been paying their superannuation contributions. Although super contributions were said to have been recorded on payslips, one supervisor said she called their super company and was told payments had not been made since March 2017.

The administrators recently said they would provide more information regarding redundancy, superannuation and outstanding employee wages, however it is reported employees are still waiting to hear what actions will be taken.

Max Brenner workers that are Australian citizens and permanent residents should be able to make a claim through the government scheme Fair Entitlements Guarantee (FEG) for up to three months of unpaid wages and annual leave. Unfortunately, this avenue does not cover superannuation entitlements.

History repeating itself

This isn’t the first time the FEG scheme has been in the spotlight. Earlier this year, dessert chain Doughnut Time announced the closure of a number of its stores due to financial difficulty. In 2016, Queensland Nickel Pty Ltd terminated the employment of several workers, resulting in a payout of $73.9 million. This was reported to be the largest payout utilising FEG for a corporate collapse, according to the ABC. This resulted in a massive loss in wages and an even bigger loss in superannuation contributions, damaging the long-term retirement goals of impacted employees.

What can employees do to protect themselves?

As an employee, it’s important to be aware of what super contributions your employer is required to make and when. Chances are, if you are 18 years old or over and paid $450 or more before tax in a month, you’re entitled to super guarantee (SG) contributions from your employer. This is irrespective of whether you work part time, casual or full time, or even if you are a temporary resident of Australia.

Super payments must be made at least four times a year by the due dates, however they can also be made more regularly as long as the total amount is paid by the quarterly due date.

Quarterly payment due dates


Due date

1 July – 30 September 28 October
1 October – 31 December 28 January
1 January – 31 March 28 April
1 April – 30 June 28 July

You can check and manage your super directly with your superannuation fund, or by creating a myGov account and linking it to the ATO. If you are unsure whether your employer is paying the SG contributions you’re entitled to, talk your employer and confirm how much super you have received. You can also report unpaid super contributions from your employer.

What does unpaid superannuation mean for a company?

The Government introduced the Treasury Laws Amendment (2018 Measures No. 4) Bill 2018 into Parliament on 28 March this year. This Bill, if passed, will introduce very serious consequences for employers who break the law by short-changing their employees. The Australian Taxation Office (ATO) will have access to new enforcement and collection provisions, including strengthened arrangements for director penalty notices. Some of the proposed amendments are to:

  • enable the Commissioner of Taxation to issue directions to employers to pay unpaid SG
  • force directors to undertake SG education courses in certain circumstances
  • disclose more information about SG non-compliance to affected employees
  • extend Single Touch Payroll reporting to all employers
  • require more regular reporting by superannuation funds.

Directors of companies where superannuation obligations have not been met may find themselves personally liable for unpaid superannuation. This is because, as part of the proposed law changes, director penalties can apply to directors of companies where the company does not meet its SG obligations with penalties extending up to 12 months’ prison in serious cases.

Proposed Superannuation Guarantee Amnesty

Another amendment (2018 Superannuation Measures No. 1) proposes numerous changes to superannuation and related tax laws, including to encourage the recovery of unpaid SG by introducing a temporary amnesty from late payment penalties for employers who disclose that they have underpaid SG in the past.

The ATO estimated that in 2014-15, around $2.85 billion in SG payments went unpaid. Of particular concern is that this estimate only relates to one income year.

The Amnesty is proposed to last for 12 months, from 24 May this year until 23 May 2019.

The Amnesty applies only to disclosuresthat are made during the 12-month amnesty period of previously undeclared SG shortfall amounts. The disclosures relate to any quarters starting when the SG regime commenced and all subsequent quarters until and including the quarter starting on 1 January 2018 — that is, the period from 1 July 1992 to 31 March 2018. This is an astonishing 26 years.

The benefits of the Amnesty will not be available for SG non-compliance that occurs on or after 1 April 2018.

When is an employer eligible for the Amnesty?

Under the proposed Bill, to be eligible for the Amnesty, an employer must:

  • voluntarily disclose SG shortfall amounts, relating to any period from 1 July 1992 to 31 March 2018, within the Amnesty period (24 May 2018 to 23 May 2019)
  • disclose SG shortfall amounts that have not previously been disclosed
  • make the payment of the SG shortfall amount during the 12-month Amnesty period
  • not have been previously informed that the ATO is examining (or that it intends to examine) the employer’s SG compliance for the relevant quarter.

An employer may still qualify for the Amnesty if it has previously made disclosures about an SG shortfall for a quarter but comes forward with information about additional amounts of SG shortfall for that quarter.

The benefits for employers who take part in the amnesty are:

  • Administration fee for SG shortfalls will be waived (currently $20 per SG statement lodged)
  • the Part 7 penalty for failing to lodge an SG statement, equal to double the amount of the SG, i.e. 200% of the SG payable will not apply
  • Catch-up SG payments made between 24 May 2018 and 23 May 2019 will be tax deductible (generally, late payments of SG are not deductible for tax purposes)

The measures are aimed to incentivise employers to get up to date with their obligations and assist the Government in tackling the SG gap problem.

So, how important is superannuation?

As of July 2014, employers have been required to contribute 9.5% into super, with individuals able to contribute further.

Whilst there is no magic age to start planning for retirement, the simple answer is the earlier you start, the more chance you have to achieve the retirement you dream of. This really comes into play because of the compounding interest effect and how powerful it can be.

According to The Association of Superannuation Funds of Australia’s (ASFA) Retirement Standard, a couple expecting a comfortable retirement will need an average of $60,457 a year.

The longer a person has secured super contributions and associated investment earnings, the higher their account balance in many cases, especially over a significant period of time. In the case of the Max Brenner and former Doughnut Time employees’ missing super contributions, this could have a significant effect on their future

This is also why young people being illegally paid cash in hand for work should consider the implications of forgoing the superannuation contributions they’re owed, as it can put the size of their retirement nest egg at risk.

How much superannuation should I have for my age?

Understanding the benchmark of how much others in our age group have saved for retirement through their super can be a useful reference guide. According to 2016 statistics released by the Australian Bureau of Statistics in the Survey of Income and Housing, the average superannuation balance by age is as below:

15 to 19 years $485
20 to 24 years $5,501
25 to 29 years $21,372
30 to 34 years $38,386
35 to 39 years $56,715
40 to 44 years $80,899
45 to 49 years $114,616
50 to 54 years $135,290
55 to 59 years $180,689
60 to 64 years $214,897
65 to 69 years $207,105
70 to 74 years $161,974
75 to 79 years $76,049
80 to 84 years $42,912

If your super balance needs a boost, you can consider making a concessional contribution such as a salary sacrifice or making a personal tax-deductible contribution. You can read more about making different kinds of voluntary super contributions here.

What does all of this mean?

It is unfortunate that sometimes it can take a scandalous or traumatic event to cause an individual to stop and reassess their retirement wants and needs, and how that weighs up with their current financial position. This is a lesson to not only former and current Max Brenner employees, all companies, but to all individuals — to partake in self-education about what they can do to protect themselves as an employee for the sake of their future.

Talk to a professional

Well-meaning friends and family advice can only take you so far – when you have so much at stake, your future and your superannuation may benefit from the support and advice from a professional in the field. Consider talking to your trusted adviser about your financial situation and retirement goals.


Rachel HunterAbout Rachel Hunter

Rachel is a relationship manager at Quill Group, working with business owners and individuals to shape their future.

Quill is the largest multidisciplinary financial services firm on the Gold Coast, with an extension office in Brisbane. Quill has a team of over 60 specialists in business accounting, financial planning, insurance and superannuation.

Cover image source: Jessica Pearson

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