Payment Standards
Detailed Discussion
Superannuation obligations are dependent on whether someone is hired as an employee or a contractor, see Contractors vs. Employees. To find out if you should be paying super, or are entitled to have super paid for you, use the Australian Tax Office's Employee/Contractor Decision Tool and Superannuation Guarantee Eligibility Decision Tool.
An employer’s obligation to pay superannuation is not affected by whether the employee is employed on a full-time, part-time or on a casual basis, or if they are a temporary or permanent resident.
Employers currently need to contribute a minimum of 11% of each eligible worker’s ordinary time earnings. Ordinary time earnings are what a worker earns for their ordinary hours of work, including over-award payments, commissions, shift loading, and certain bonuses and allowances. Payments for overtime hours are generally not ordinary time earnings.
That superannuation rate will rise by 0.5% per year until it reaches 12% on 1 July 2025.
Responsibilities of Employers
Employers must pay superannuation for employees at the required rate. This is referred to as the super guarantee. In the past, the superannuation guarantee applied only to employees who earned more than $450 per month, however this limitation was removed on 1 July 2022 and all eligible workers are now covered by the superannuation guarantee.
Super must be paid at least four times per year by the quarterly due dates outlined by the Australian Taxation Office. Some employees will be eligible to nominate their own super fund.
The Superannuation Legislation Amendment (Choice of Superannuation Funds) Act 2004 (Cth) sets out the ‘SuperChoice obligations’, which confers on certain employees the right to choose the superannuation fund that will receive their employer’s super guarantee.
Employers must:
determine if any new employees are eligible to make a choice of fund
provide a Standard Choice Form to eligible new employees within 28 days of their starting date
act on their employee’s choice of superannuation fund
If an employee does not exercise their right to choose a superannuation fund, they must be paid their super guarantee into a fund nominated by their employer.
Contractors
Employers must pay superannuation to a contractor’s superannuation fund where the contractor is a deemed worker. This includes contractors delivering one-off projects.
Deemed workers are generally contractors who provide their personal skills and expertise as sole traders with an ABN. This includes artists, installers, curators, photographers and workshop facilitators, where more than half the dollar value of the contract is for their labour.
It is good practice for employers who are contracting artists or arts workers for their labour to pay superannuation on top of an artist fee, regardless of whether the contractor is a deemed worker or not. It is recommended that this is paid directly into a contractor’s chosen super fund.
The employer will need to calculate and pay superannuation at the required percentage of fees for labour invoiced by the contractor. It is good practice for the employer to consider and budget for superannuation when negotiating a contractor’s fee, ensuring it is separated from the artist's fee.
Responsibilities of Contractors
The contractor will need to provide the employer with a completed Superannuation Choice form so that the employer knows where to send the superannuation each quarter, see NAVA’s guide to Completing a Super Choice Form. Superannuation cannot be paid directly to the contractor.
Contractors who invoice under a Partnership, Proprietary Limited Company or as a Trust are not eligible for superannuation to be paid by the employer directly into their super fund as they are generally employees of their own business and need to pay their own superannuation.
Self-employed people are not employees of an employer and do not have to make super contributions for themselves, but they can choose to make superannuation contributions to their own superannuation account if they wish to do so.