The Superannuation Guarantee is the mechanism that makes retirement contributions compulsory in Australia. Employers must contribute a legislated minimum percentage of each employee's ordinary time earnings into a complying super fund, on top of their wages.
Ordinary time earnings, not total pay
The contribution base is ordinary time earnings, which is not the same as everything paid. It broadly covers ordinary hours, including many loadings and allowances, but excludes some payments such as overtime in most circumstances. Getting this base wrong is one of the more common Australian payroll errors, because it looks like a simple percentage until you have to decide what it applies to.
- The rate has been legislated to rise in steps, so it should be checked rather than assumed
- Contributions are due quarterly at minimum, with deadlines after each quarter end
- Late payment attracts a charge that is not tax deductible, making lateness expensive
- Employees can generally nominate their own fund, with a stapled fund applying by default
Why it matters when hiring internationally
Superannuation is a substantial addition to the cost of an Australian employee and is entirely employer-funded. It also carries a hard deadline with a punitive consequence for missing it, which makes it one of the clearer tests of whether a payroll arrangement is being run properly.