Employer Super Obligations Australia — Complete Guide

Every Australian employer is legally required to pay superannuation for eligible employees under the Super Guarantee (SG) legislation. Since 1 July 2025, the SG rate is 12% of ordinary time earnings (OTE). Failing to pay on time or in full triggers the Super Guarantee Charge (SGC) — a penalty regime administered by the ATO that is more expensive than simply paying the obligation.

Key Takeaways

• The Super Guarantee (SG) rate is 12% from 1 July 2025 — an employer legal obligation, not discretionary
• SG applies to employees aged 18+ (and under-18s working more than 30 hours per week in a week)
• SG must currently be paid at least quarterly — from 1 July 2026, Payday Super requires same-day payment
• Failing to pay on time triggers the Super Guarantee Charge — more expensive than paying the obligation
• Employers must accept an employee’s fund choice except in certain award or enterprise agreement situations

The Super Guarantee Rate — Now 12%

The SG rate reached its legislated final destination of 12% on 1 July 2025. The phased schedule:

The 12% rate applies to ordinary time earnings (OTE) — not the total salary package including overtime.

Who Is Eligible for Super?

You must pay SG for an employee if they:

• Are aged 18 or over, or are under 18 and work more than 30 hours per week in a week
• Are paid $450 or more in a calendar month — Note: this threshold was abolished from 1 July 2022. All employees (including casual and part-time) are now entitled to super regardless of earnings.
• Are engaged on a full-time, part-time, or casual basis
• Are on a domestic or temporary visa (including working holiday and temporary skilled visas)
• Are working under a contract that is principally for their labour

Who Is NOT Eligible

• Non-resident employees working overseas for an Australian employer (generally)
• Individuals engaged as genuine independent contractors (where the contract is not principally for labour)
• Certain religious practitioners (exemption under SG legislation)
• Members of the Defence Force (covered under a separate scheme)
• Some foreign executives (ATO applies exemptions in specific circumstances)

Contractors vs employees: This is a significant risk area for employers. The ATO looks at the substance of the arrangement, not the label. Individuals labelled “contractors” who work predominantly for one employer, follow direction, and use the employer’s tools may be deemed employees for SG purposes. See the ATO’s contractor vs employee decision tool for guidance.

Ordinary Time Earnings (OTE) — What Super Is Calculated On

SG is calculated on ordinary time earnings (OTE) — which generally means the earnings for ordinary hours of work.

Included in OTE

• Regular salary or wages for ordinary hours
• Allowances that form part of ordinary pay (e.g. regular shift loading, site allowances)
• Commissions
• Bonuses for ordinary hours worked
• Certain leave payments (annual leave, personal leave)
• Payments in lieu of notice

Excluded from OTE

• Overtime pay — additional earnings for hours beyond the ordinary contracted hours
• One-off bonuses not related to ordinary hours
• Genuine expense reimbursements
• Payouts on termination (in most circumstances)

Key rule: If you’re unsure whether a payment is OTE, the ATO’s SG ruling (SGR 2009/2) provides the authoritative guidance.

Quarterly Payment Due Dates

SG contributions must be in the employee’s super fund by the following dates:

Important: The due date is when the money must be received by the super fund, not when you initiate the payment. Allow processing time if using a clearing house — typically 3–5 business days. Initiate payments at least one week before the due date.

Payday Super — From 1 July 2026

The federal government has passed legislation requiring employers to pay super at the same time as wages — rather than quarterly — from 1 July 2026. This is a significant change that will affect payroll systems and cash flow management.

Under payday super:

• Each pay cycle triggers a super payment (aligned with each payslip)
• The SGC penalty applies per payment missed, not per quarter
• Small employers who currently use the quarterly system will need to adjust payroll and cash flow accordingly

Employers should begin reviewing their payroll systems and clearing house arrangements now to prepare for the 2026 transition.

The Super Guarantee Charge (SGC) — The Penalty for Late or Underpaid Super

If you fail to pay the correct SG amount by the due date, you must:

1. Lodge an SGC statement with the ATO
2. Pay the Super Guarantee Charge — which is calculated differently from (and more expensively than) simply paying the super

The SGC is based on salary and wages, not OTE — meaning it applies to a broader base than the original obligation. The SGC also includes:

• Nominal interest at 10% per year (calculated from the start of the quarter)
• An administration charge of $20 per employee per quarter

The SGC is not tax-deductible — unlike regular SG contributions, which are. This means paying the SGC is more costly than paying super on time in every case. Employers who discover they have underpaid super should self-disclose to the ATO promptly — the ATO has a voluntary disclosure program that may reduce penalties.

Employee Choice of Super Fund

Eligible employees have the right to choose which super fund receives their SG contributions. As an employer, you must:

1. Provide new eligible employees with a Standard Choice Form (ATO form) within 28 days of starting
2. Pay contributions to the employee’s chosen fund if they nominate one
3. If no valid nomination is made — apply the stapling rules (see below)
4. If no stapled fund exists — use your employer default fund (a MySuper product)

Stapling — Linking Employees to Their Existing Fund

Since 1 November 2021, employers must follow the stapled fund rules for new employees who do not make a fund choice. A stapled fund is an existing super account linked to the employee by the ATO.

The process for new employees (no fund choice):

1. Accept the employee’s choice if they nominate a fund
2. If no choice — request the employee’s stapled fund from the ATO via the ATO’s Online Services for Business portal
3. Pay contributions to the stapled fund
4. Only use your default fund if the ATO confirms the employee has no stapled fund

For full detail on stapling obligations, see Stapled Super Fund Explained — What Employers Need to Know.

SuperStream — Mandatory Electronic Standard

All employers must pay super contributions using the SuperStream standard — a standardised data and payment format mandated by the ATO.

SuperStream ensures contributions and employee data are transmitted electronically to super funds in a consistent format. Options for complying with SuperStream:

• ATO’s Small Business Super Clearing House (SBSCH): Free for businesses with 19 or fewer employees or turnover under $10 million. See Small Business Super Clearing House.
• Commercial clearing houses: Offered by payroll software providers (Xero, MYOB, QuickBooks, Employment Hero, etc.) — typically included in payroll subscriptions
• Paying funds directly: Most large funds accept SuperStream-compliant direct payments

Record-Keeping Requirements

Employers must keep records of super contributions for at least 5 years, including:

• The amount contributed for each employee each quarter
• The fund the payment was made to
• The date of payment
• The employee’s TFN (if provided) — to ensure contributions are allocated correctly

Frequently Asked Questions

Do I have to pay super for a worker if they invoice me as a contractor? Not automatically — but the label “contractor” does not determine the answer. If the contract is principally for the worker’s labour (rather than an outcome), and the worker works primarily for you, the ATO may treat the arrangement as employment for SG purposes. The ATO’s contract employee rules (Section 12(3) of the SGAA) are important here. If in doubt, seek advice from a registered tax agent.

What if I can’t afford to pay super on time? You must still lodge an SGC statement and pay the charge. The ATO may allow payment arrangements in genuine hardship cases, but the charge continues to accrue. Failing to lodge the SGC statement carries additional penalties. Contact the ATO promptly if you are in difficulty.

Do I have to pay super on bonuses? It depends on the nature of the bonus. Performance bonuses linked to ordinary hours generally count as OTE and attract super. One-off discretionary bonuses not linked to ordinary hours may be excluded. The ATO’s SGR 2009/2 provides detailed guidance on specific payment types.

My employee is 17 and works casually — do I pay super? Yes — if they work more than 30 hours per week in any given week. The earnings threshold ($450/month) was abolished from 1 July 2022. Age is the only remaining threshold (under 18, 30-hour test per week applies).

For further guidance, consult the ATO Super for Employers resource or speak with a registered tax agent.