Employer Super Obligations Australia — Guides for Business Owners and Employers

If you employ people in Australia, paying superannuation is a legal obligation — not optional. The Super Guarantee (SG) rate is 12% of ordinary time earnings from 1 July 2025, and failure to pay on time or in full triggers the Super Guarantee Charge (SGC), a penalty that is more expensive than simply paying super on time.

Who Must Receive Super?

An employee is entitled to SG if they:

• Are 18 or over and earn any amount in ordinary time (no minimum earnings threshold from 1 July 2022)
• Are under 18, work more than 30 hours per week, and earn any amount
• Are employed full-time, part-time, or casually

Contractors paid mainly for their labour — rather than for a specific result — may also be classified as employees for SG purposes. The ATO’s employee/contractor distinction is based on the totality of the working arrangement, not simply what the contract says.

What Is Ordinary Time Earnings?

The SG is calculated on ordinary time earnings (OTE) — not total remuneration. OTE generally includes:

• Base salary and wages
• Commissions and piece rates
• Allowances paid for ordinary hours of work
• Over-award payments

OTE generally excludes overtime pay. If an employee earns $80,000 base salary with $10,000 in overtime, the SG is calculated on $80,000: that is $9,600 in super (12%).

Payment Deadlines — Quarterly and Then Payday

Currently, employers must pay SG contributions by the 28th day after the end of each quarter:

From 1 July 2026, Payday Super takes effect. Employers must pay SG on the same day as wages. This requires payroll systems capable of making SuperStream-compliant super payments on paydays, which may necessitate a system upgrade for some employers.

The Super Guarantee Charge — What Happens If You’re Late

If super is paid late or underpaid, the employer must pay the Super Guarantee Charge (SGC) to the ATO. The SGC is more costly than the original obligation because it:

• Is calculated on total salary and wages (not just OTE) — a larger base
• Includes a nominal interest component (10% per year from the start of the quarter)
• Includes an administration component ($20 per employee per quarter)
• Is not tax-deductible (unlike regular SG contributions, which are)

Employers who discover they have underpaid super should correct this promptly. Voluntary disclosure to the ATO before detection generally results in lower penalties.

SuperStream — How Super Payments Must Be Made

All super payments must comply with SuperStream — the ATO’s electronic standard for super data and payments. This means payments must be made electronically with a standardised data file linking the contribution to the employee and their fund.

Small businesses (19 or fewer employees or turnover under $10 million) can use the ATO’s free Small Business Super Clearing House (SBSCH) to make compliant payments to multiple funds in a single transaction.

Stapling — Finding an Employee’s Existing Fund

Since November 2021, if a new employee does not nominate a super fund, the employer must request the employee’s stapled super fund from the ATO via Online Services for Business. The employee’s existing fund follows them between employers. Employers must not default a new employee into the employer-chosen default fund if the ATO’s lookup returns a stapled fund.

Frequently Asked Questions

What is the super rate for employers in Australia? From 1 July 2025, the Super Guarantee rate is 12% of ordinary time earnings. This is the legislated final rate after a series of annual increases.

What happens if an employer doesn’t pay super? Late or unpaid super triggers the Super Guarantee Charge (SGC), which is calculated on total wages (not just OTE), is non-tax-deductible, and includes interest and an admin fee. Deliberate non-payment can also attract ATO audit activity and penalties.

When does Payday Super start for employers? Payday Super is legislated to begin 1 July 2026. From that date, employers must pay SG on every payday — not quarterly. Employers should begin preparing their payroll systems well in advance.

Do I need to pay super for contractors? It depends on the nature of the arrangement. Contractors who are paid primarily for their labour (rather than for a result) and who work under your direction may be employees for SG purposes regardless of what the contract says. The ATO has guidance on the employee/contractor distinction.

For advice tailored to your situation, speak with a licensed financial adviser or registered tax agent. You can find an adviser through the ASIC financial advisers register or MoneySmart.