Are employers gaming the $450 SG threshold?

21 August 2019

A key parliamentary committee has been alerted to reports about employers gaming the $450 superannuation guarantee (SG) threshold to avoid meeting their SG obligations.

The problem has been raised by seniors group COTA Australia which has used a submission to the Senate Economics Legislation Committee pointing to reports about employers restricting the hours of low paid employees so the employees will not earn more than $450 a month and will not incur the 9.5 per cent SG.

“That is, the $450 provision creates a structural incentive for under-employment. When this applies to several employers for whom an employee works, the comparative injustice is clear,” the COTA submission said. “An employee earning say $2,690 per month on one part time job will earn over $3,000 per year in super; whereas an employee earning $2,690 per month in three jobs, all earning under $450, will receive no super.”

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It said that many had argued that such practices were a particular issue for women and that COTA agreed that there was a disproportionate gender impact.

“COTA submits that this discriminatory clause against one class of workers compared to another is broader than a gender issue. It is an issue of fairness and equity as we outlined above,” it said. “Those many and increasing number of Australians who are employed holding down two or more part time jobs, each of them earning less than $450 a month, deserve to receive the same proportional retirement income that another Australian earning the same overall income from a single employer would receive.”

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I may have missed something, but if you earn $2,690 per month across 3 jobs, I'm not sure how all of them could be paying you less than $450 per month

If you earn $450 per month across 3 part time jobs, that's $1,350 (not $2,690 as stated in your article) - 6 part time jobs at $450 per month would result in $2,700 total income per month.

Yes, "I can do maths", 6 x 450 is 2700.
"gaming the system" almost certainly occurs and should be stamped out. I can see no valid reason why 9.5% super shouldn't be paid to all workers regardless of how little each worker earns.
The other thing that should be stamped upon is "commission based pay" AKA an excuse to minimise employer SG contributions.

yeah, someone doesn't do maths well. I issue really. Need some encouragement to do more hours and get going. Its a relatively very small issue compared to whats in front of us now.

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