Superannuation contributions are rising again. Is your business ready?

All employers have an obligation under the Superannuation Guarantee (Administration) Act 1992 to make superannuation contributions to employees at least every quarter.

Currently, the minimum superannuation contribution employers are required to make in respect of each employee is 11.5 per cent of their ordinary earnings (subject to eligibility requirements).

From 1 July 2023, the minimum superannuation contribution increased to 11 per cent and has continued to increase yearly thereafter by 0.5 per cent until reaching 12 per cent in July 2025, as noted in the table below:

What does this mean for employers?

To prepare your business for the increase to the minimum superannuation guarantee payments, we advise that your business does the following:

1. Adjust your payroll system

You’ll need to make sure that your payroll system has been adjusted to ensure the correct minimum superannuation contribution is paid to all employees. Where payment for wages is made in the July 2025 quarter, albeit for work performed during a previous period, the 11.5 per cent superannuation guarantee contribution will apply.

If you fail to pay the correct rate of the superannuation guarantee into your employees’ super accounts, then you may be liable to pay the superannuation guarantee charge (SGC). The SGC is an Australian Tax Office (ATO) penalty for late or inaccurate superannuation payments which includes all superannuation guarantee amounts owing to employees, plus interest and an administration fee.

2. Review all employment contracts

It’s wise to review your employees’ contracts of employment to determine whether you are required to make the additional increase payment, or whether their contract of employment adequately offsets this.

For example, a contract of employment may state that an employee is paid on a total remuneration basis, which includes statutory superannuation under any legislation at any point in time. In this case, then it may be possible for an employer to reduce an employee’s base rate of pay to effectively offset the increase in superannuation, such that an employee’s total remuneration remains unchanged.

Naturally, an employer must carefully ensure that the wording of the employment contract enables such an approach to be taken, and an employee’s resulting reduced base rate of pay continues to result in the employee being paid in excess of minimum entitlements.

Even if an employer can take this approach, it remains open for an employer to pass on the superannuation increase while maintaining an employee’s base rate of pay.

If the business’s template contracts of employment are not drafted on this basis, in light of potential future increases in superannuation, consideration should be given as to whether the business wishes to update its employment terms for current and/or future employees.

However, if an employee is paid a minimum award salary or the contract of employment isn’t drafted on a total remuneration basis, the business will be obligated to increase its minimum superannuation contribution to 12 per cent from 1 July 2025.

Businesses are strongly encouraged to actively engage with and communicate with employees, so they are aware and understand the approach the business intends to take.

What else is set to change?

The Government intends to introduce legislation requiring employers to pay their employees superannuation at the same time they pay wages, known as “Payday Super”. It’s anticipated that this change will come into effect from 1 July 2026. Many businesses currently pay superannuation in a staggered manner, up to quarterly. If you’re one of those businesses, you should prepare to change your payroll; there are only so many quarterly periods left until this may not be a compliant approach.

This change is intended to maximise the amount of interest that an employee earns through their fund. It’s also part of a larger effort to track unpaid superannuation, which is more likely when contributions are not made at the same time as wages are paid. In the most recent 2025-26 Federal Budget, allocations were made to ensure the ATO will receive additional funding to strengthen superannuation compliance. It’s expected that such additional funding will help reunite approximately $31 million in unpaid superannuation with workers.

If any of this information has raised questions about this year’s superannuation contribution increase or you have another workplace matter that you need assistance with, please reach out to our Citation Legal team for a confidential discussion here.

About our author

Amanda Curatore is a qualified Senior Associate at Citation Legal. Amanda is highly experienced in providing workplace relations advice and assistance to clients in a wide range of matters, including employment contracts, modern award interpretation, managing performance, bullying and harassment, terminations and managing risk.