More than a quarter of Australia's top 20 listed companies will not fund the superannuation increase for all employees from July 1 but will instead deduct it from take-home pay.
ANZ, Wesfarmers, Macquarie Group, Telstra, Goodman Group and Transurban are among the biggest companies relying on clauses that specify "total remuneration package" or "total package value" or "remuneration inclusive of superannuation" to avoid forking out an extra 0.5 per cent in superannuation to workers on individual agreements.
The Superannuation Guarantee – compulsory superannuation paid on top of ordinary earnings – goes up from 9.5 per cent to 10 per cent on July 1. For most workers, including those on awards and enterprise agreements, this will mean an increase in total remuneration because their base salary will remain the same, while the superannuation component will increase.
Superannuation Minister Jane Hume said the government always knew there was a trade-off between super and wages.
But for the 40 per cent of Australian workers on individual agreements, it will depend on the wording of the contract and the discretion of their employer. Many will see an immediate reduction to take-home pay to fund the super increase without increasing total remuneration, though they may be compensated down the track in the next annual pay review.
A spokesperson for the Fair Work Ombudsman warned the legality would depend on the wording of the individual employment agreement. "An employer seeking to reduce an employee's pay, commensurate with the scheduled increase to the superannuation guarantee rate, and in reliance on this type of contractual term, should seek independent advice," the spokesperson said.
Jane Hume, the Minister for Superannuation, Financial Services and the Economy, said Australians were warned this would happen.
"Despite months of Labor and Industry Super Australia denying the trade-off between super increases and take home wages … the government has always been aware that there is in fact a trade-off," Senator Hume said. "The government weighed this trade-off carefully against the economic data prior to the budget."
Most economists say there is a trade-off between increases to superannuation and future wages rises and institutions and in July last year the Retirement Income Review noted that many individual agreements define a total remuneration package, which includes superannuation, and that would suggest increases in the Super Guarantee are "contracted onto the employee".
However, Labor's superannuation spokesman Stephen Jones said the clear intention of legislators – who introduced the Superannuation Guarantee under the Keating government in 1992 – was for superannuation to be funded by employers on top of ordinary wages.
Mr Jones, a former employment lawyer, said it was "dishonest" for employers to deliberately draft an employment agreement to avoid paying super increases while the typical employee would either be ignorant or powerless to negotiate a change to standard terms.
Labor's superannuation spokesman Stephen Jones said deducting the super increase from base salary was a "miserable" way to treat employees.
"It's a pretty miserable way to treat your employees, most of whom will have been on a wage freeze for a long period of time," Mr Jones said. "The government should make a very clear statement on to businesses that they should not cut people's wages to pay for the Superannuation Guarantee levy that has been known about for in excess of eight years and delayed for seven years."
Instead, he said, Coalition politicians were "cheering on ANZ" and hoping more companies would follow suit, so they could use it as ammunition in their war against super.
The increase was legislated by the Gillard government and delayed by the Abbott government in 2014 but it faced fierce opposition from a number of Coalition politicians who wanted it delayed further, such as Liberal backbencher Tim Wilson who describes it as "insane" that young Australians are forced to put wages into super instead of to save for a home.
The same arguments are expected to arise with the legislated future increases, which will see the rate of Superannuation Guarantee progressively increase to 12 per cent by 2025.
Mr Jones said he has never denied the economic link between superannuation increases dampening wages growth but those who say every dollar of superannuation is a dollar less in wages were "plain wrong".
Not all companies are avoiding paying the additional superannuation. Among other companies in the S&P ASX20, Commonwealth Bank, BHP, CSL, Westpac, Woolworths Group, Rio Tinto, Afterpay, Aristocrat Leisure, REA Group, Newcrest Mining and Xero are increasing remuneration for all employees subject to the maximum superannuation contribution.
Several companies including NAB, Fortescue Metals Group and Woodside Petroleum already pay superannuation of 10 per cent or above on top of base salary.
An ANZ spokesperson said about 12,000 staff in head office would not receive the increase on July 1, with the increase in superannuation coming out of base salary, but this would be considered along with other factors in the annual pay review later in the year. This would not affect branch and contact centre staff who are paid under an enterprise agreement.
At Transurban most employees are on a fixed-remuneration employment agreeement and will lose base salary to compensate for the superannuation rise, but the company will consider this in the pay review later in the year.
A Telstra spokesman said most employees already receive 10 per cent superannuation, while the 5 per cent of staff not covered by the enterprise agreement will have base salary cut to fund the increase. Telstra's 2020 annual report says it has nearly 29,000 full-time equivalent staff, implying about 1450 staff will lose take-home pay.
A Wesfarmers spokesperson said the group, which includes retailers such as Bunnings, Kmart, Target, Catch, Officeworks and several industrial businesses, had a decentralised approach. At Bunnings most staff are already on 10 per cent and the company will fund a rise for other employees, but most of the businesses will take it out of base salary for staff on fixed-remuneration contracts pending an upcoming salary review.
Outside the S&P ASX20, Scentre Group, which runs Westfield shopping centres, and AGL are deducting the superannuation increase out of base salary for staff on individual agreements. A Scentre Group spokesperson said superannuation is among the issues included in the February pay review.
Property developer Mirvac, Sydney Airport, energy infrastructure business APA Group, and Nine (publisher of this masthead) are also funding the increase on top of existing wages, as are a number of private companies including IBM, Microsoft and Atlassian. Ten Network, Seven Group and Facebook refused to answer questions, while Google did not respond before press time.
A Mercer report on the superannuation increase published in May surveyed 145 companies and found more than half had employment agreements that specified total remuneration rather than base salary plus super. Of those, two out of three were planning to pass on at least some of the cost to employees.
