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Super warning for Aussies as bosses 'sneakily' force you to cover cash boost

Workers benefited from an increase to superannuation on July 1, but there's a way your boss could flip the financial win to a loss.

Finance guru Nicole has issued a warning about the extra super bump workers should be getting.
Finance guru Nicole has issued a warning about the extra super bump workers should be getting. (Supplied)

One of the money-swelling sweeteners that hit on July 1 was an increase to your superannuation payments, from 11 per cent to 11.5 per cent. But be warned, some employers are now making their employees pay the extra.

Two loopholes in the legislation could mean this benefit becomes the opposite for you. Firstly, they could sneakily take it from your future pay rises.

Secondly, and worse still, some employees will have contracts that allow them to immediately dock you.

Paying super is the responsibility of your employer. That’s the beauty of our retirement savings scheme. The money goes into your fund automatically, while you go about your busy life.

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But employers – just like all of us – are getting financially squeezed on all fronts. This 0.5 per cent salary super hike, across all their staff, is the latest way.

And you can bet some will cynically suppress pay rises by this amount or more – where they are at their own discretion – to combat the extra super cost.

Unless you are on an award or the minimum wage (which went up 3.75 per cent on July 1), you only get a pay rise if you negotiate it. And employers are under no obligation to give you one.

But you are entitled to regular reviews (perhaps only annually). Here's how you can capitalise.

You need to know two things:

1. Annual wage inflation: It won’t carry much weight to say you are contending with higher costs – everyone is. But it will help to know that wage inflation is – finally – roughly equal to consumer price inflation.

After a long period of the average pay rise failing to keep up with the prices we are paying, wage growth is running at 4.1 per cent versus consumer prices growth of 4 per cent.

2. Quarterly wage inflation: In the March quarter, the ABS reported that the main contributor to Australia’s overall increase in wages was the private sector, rising 0.8 per cent; public sector wages rose 0.5 per cent.

So, in either case, increases – for the quarter only – equal or outstrip annual inflation.

That’s important ammunition to stop your employer from holding back wage rises.

If you have signed an employment contract that is on a total employment cost basis, you might get a rude shock the very next pay cycle.

Here, the overall value of your salary package – you guessed it – includes super contributions.

As employment laws firm MLW Legal puts it: “An employer will have sufficient authority to decrease an employee’s salary to absorb the increase in compulsory superannuation if the written employment contract provides that an employee will receive a total remuneration package inclusive of superannuation.

“For example: ‘The employee will be paid a total remuneration package of $100,000 inclusive of superannuation’.”

And that means that if your super goes up, your salary goes down.

It’s a ‘super’ slap indeed because you get your retirement savings way in the future, while you lose pay today.

How do you tell if your boss is taking the increase in super payments from your salary?

It could go down.

But beware: the stage 3 tax cuts we all received from July 1 could also mask this. So employees need to be on alert for a hidden super raid, and check their pay slips vigilantly.

When employers are allowed to immediately reduce your salary, the only thing you can do is to – again – go back to the pay negotiating table.

Bottom line: If an employer is going to avail themselves of the two legal ways that mean you lose salary for super, you may be unable to stop the hit to your finances.

If all else fails in your bid to make your employer pay for the increased mandatory super contribution then take solace from the fact it is on its way up to a final 12 per cent.

This will happen once more in July next year, with another 0.5 per cent increase.