Paying super for your employees, simply explained

The rate

The super guarantee rate is 12% of an employee's ordinary time earnings. It is paid on top of wages, not taken out of them.

Work it out

When it is due

Super is generally due within 28 days of the end of each quarter. Paying late means extra charges, so many employers pay more often.

Who counts as an employee

Whether someone is an employee or a contractor depends on the real working arrangement, not the label you give it. Some contractors paid mainly for labour can also count as employees for super. Check the ATO's guidance.

Tip. Use a payroll tool or accountant so the numbers are right each time.

A worked example

An employee earns $1,500 a week in ordinary time earnings. Super at 12% is $180 a week, which is $2,340 a quarter. That is paid on top of their wages.

Keep it simple

• Pay into the employee's chosen super fund.
• Pay each quarter at the latest, or more often if that keeps cash flow smoother.
• Keep records of what you paid and when.
• Check whether any contractors you use count as employees for super.

A worked example

Who is an employee for super?

• Full-time, part-time and casual employees are generally covered.
• Some contractors paid mainly for their labour may be treated as employees for super purposes.
• Apprentices and trainees are generally covered.
• Directors who are employees are covered.

Watch out. Getting worker classification wrong can be costly. If you are unsure whether someone is an employee or a contractor, ask your accountant or the ATO.

Keep it simple

1. Use a clearing house or payroll softwareTo pay many funds at once.
2. Pay a little each pay runSmaller regular payments are easier on cash flow.
3. Record each paymentDate, amount and employee.
4. Reconcile each quarterBefore the due date.
5. Pay earlyA buffer for processing delays.

Mistakes with super

• Paying late and missing the deduction.
• Calculating super on the wrong earnings.
• Forgetting casual staff and apprentices.
• Mixing up contractors and employees.
• Not keeping proof of payment.

A real-life scenario

A small electrical business paid its two employees every fortnight but left super until the quarter ended. The first time cash was tight, the super bill was a shock. The owner switched to paying super with every pay run through a clearing house, which spread the cost and left a record for each payment. By the due date, nothing was outstanding.

Small regular payments are easier on cash flow than one big one.

Quick answers