Regardless of your age or experience, if you’re a member of the workforce in Australia then it is crucial you understand what you are and aren’t entitled to in terms of superannuation. Employing casual employees can be greatly beneficial to businesses for a number of reasons, but it’s important to realise there are some businesses that don’t pay their casual employees superannuation. So it’s important to be aware of your superannuation and monitor it closely. This article will go through some of the main things a casual worker should be aware of about superannuation.
The table below displays a snapshot of super funds on Canstar’s database for workers aged 18-29, with a super balance between $0 and $55,000. Please note that these products are sorted by Star Rating (highest to lowest).
Please note that the performance information shown in the table is for the investment option used by Canstar in rating of the superannuation product.
Canstar considers the annual investment returns of a product’s default investment option, including default life-stage options. Where a product does not have a default investment option, annual returns for the investment option with the highest FUM and a 60-80% growth asset allocation are used.
The Superannuation Guarantee
The Superannuation Guarantee is a compulsory system of superannuation support for employees. It was first introduced in 1992 and has gone through multiple changes since then. At the time of writing, the SG scheme requires that employers make a compulsory 9.5% superannuation contribution to an eligible employee’s choice of super fund.
This 9.5% is based on your yearly ordinary time earnings, which doesn’t factor in overtime. What it does include however are the following:
- Over-award payments
- Agreed-upon rate per task completed
- Performance bonuses
- Christmas bonus
- Annual leave
- Termination payments in lieu of notice
Most of these don’t apply to casual employees, but it will be useful to know if you decide to take on a full-time or part-time job.
Superannuation for casual employees
Casual employees are covered under the SG scheme, and the rules are very similar to those that apply to permanent employees. The SG scheme applies to all employees, regardless of whether they are full-time, part-time or casually employed, and in many cases also applies to contractors and even temporary Australian residents.
For casual workers, the normal 9.5% SG rule applies if you earn more than $450 (before tax) in a single calendar month and you:
- Are at least 18 years old; or
- Work more than 30 hours per week if you’re under 18, or are employed as a domestic/private worker
Industries with the most casual employees
According to the Australian Bureau of Statistics Characteristics of Employment report from 2016, the following industries have the highest concentration of casual workers:
- Hospitality: 79%
- Food preparation assistants: 75%
- Labourers: 58%
- Sales support: 56
- Sports and service workers: 55%
- Farm and garden workers: 55%
- Cleaners and laundry workers: 45%
- Construction and mining workers: 45%
If you’re at least 18 and earn less than the threshold, or are under 18 or do work of a domestic or private nature and work less than 30 hours in a week, then you aren’t entitled to any superannuation and your employer does not have to make any contributions.
There are also several things you should be aware of when it comes to signing up for/receiving super:
- Your employer should offer a choice of super funds
- You should be presented with a standard choice form when choosing a super fund or starting a new job
- Your employer should not attempt to sway or influence your choice of super fund
- While many employers make your super contributions every fortnight, by law you must be paid at least quarterly, by the 28th day after the end of each quarter
- Most super funds provide life insurance in every new super account set up in your name, either by default or as an optional inclusion. This is not free, and insurance premiums will be deducted from your super (you can boost, decrease and even cancel this cover). As a casual employee, consider whether you really need to be paying for life insurance at your current life stage. Canstar Research has found that paying for life insurance through super can take up to $244,000 off your final retirement figure (based on a starting balance of $30,000 and an annual income of $60,000).
There is also the issue of switching jobs and how this can impact your super. If you’ve moved between casual roles, then chances are you may have ended up with multiple different super funds which isn’t right for everyone, as your super balance could diminish without regular payments.
According to the Australian Taxation Office (ATO), 45% of the workforce were unaware they were holding multiple super accounts in 2016. That’s 6.3 million people! Some people in this situation decide to consolidate their super funds, but it’s important to note it isn’t right for everyone. So as always, doing your homework is recommended.
What if my employer isn’t paying me super?
It’s important to know your rights as an employee when it comes to super, and you should consider monitoring your super account and payslips to ensure you’re being paid correctly and on time.
If your employer isn’t paying the minimum amount of Super Guarantee by the correct date and amount, then you might consider raising the issue with them first. You can ask them how often they’re paying your super and which funds they’re paying it into. It’s entirely possible that there has been a mistake and that they’ve sent your super to the wrong account or that your new working hours haven’t been recorded.
If however, they are still refusing to pay your super, then you can lodge complaints with the following organisations:
The Australian Workers’ Union
Phone: 1300 885 653
The Australian Taxation Office
Phone: 13 28 65
Never fall into the trap of assuming that you aren’t entitled to superannuation as a casual employee. While it might only seem like a few hundred dollars here and there at the moment, when you retire you’ll thank current you for ensuring your super is being paid correctly and on time.