Key News Summary – a Labor government would change the laws to give employees a legal right to collect their own superannuation and the Commonwealth the right to impose fines of 10% and 300% of un/under paid superannuation contributions, if there are misleading statements or under-reporting to the ATO (respectively)


On 16.12.18, the Shadow Treasurer: Mr Chris Bowen announced that a Labor Government was committed to ensuring that workers’ correct superannuation was paid, by enacting the following 2 changes.

1.  Workers get their own right to pursue payment of super

would change the laws to include a right to superannuation, within the National Employment Standards, which will give all employees the power to pursue their unpaid superannuation.

Currently unpaid or underpaid employer superannuation contributions are a debt owed to the Australian Taxation Office, rather than the worker. Unless there is a clause in their award or agreement, workers can’t chase this money – as the money is not technically owed to them.

By placing superannuation within the National Employment Standards, in the Fair Work Act, a Labor Government would empower all employees to recoup unpaid super from employers through the Fair Work Commission or the Federal Court.

I have long been saying that employees need a clear and universal right, to pursue their super, themselves. This might be useful individually. It would be useful, for unions, who could help a group of people, hired by the same employer. And most importantly, the class action lawyers could form a powerful force to collect the correct amount of super for potentially huge groups of employees.

To deal with phoenixing, there might need to be some rights created, against not just the employer, but related companies, directors, shadow directors, and those involved in any fraud.

2.  Increase penalties for underpayment or under reporting

Labor would also strengthen the ATO compliance regime and increase penalties for employers for underpayment or non-payment of superannuation. Labor will hit them with bigger fines.

  • Employers who underpay superannuation to their staff because of a false or misleading statement will face fines equal to 100 per cent of the unpaid super.
  • Employers who fail to tell the ATO about unpaid superannuation when asked will face fines equal to 300 per cent of the unpaid super.

This still depends on the authorities detecting non-compliance, but with the changes above, there will be the full range of employees, better ‘incentivised’ to report underpayment.

This announcement doesn’t say

  • what happens to the 100% and 300% fines. Currently unpaid super, collected under the SGC Act, is paid to the employee’s superannuation fund. I suspect these fines will just go into consolidated revenue. If three times the missing amount, went into the employee’s super fund, they would be extra ‘incentivised’ to extract collection.
  • what happens if the employee manages to collect their super, under the personal rights created (per above) – do the contributions have to be double paid? The ATO collecting fines and the employee attempting to collect his/her super, could be in a competition, which a barely solvent employer might not be able to bare.

Perhaps the employees could be given the right to recover these extra amounts, and put them in their super fund, as added incentive, to privatise the collection and enforcement.

There will be some fine print to be worked through here, but this announcement has the bones of an important reform.

[Chris Bowen’s website: media release; LTN 243, 17.12.18; Tax Month – December 2018]

FJM 21.12.19

CPD (comprehension) questions

  1. What is the first of the measures announced by the Shadow Treasurer?
  2. What is, arguably, the most potent use of this right?
  3. What is the second of the announcements?
  4. Where will these employer payments go?
  5. What might the benefit be if the ‘fines’ went into employee’s super (like the current SGC system)?
  6. How might these two announcements be in competition.
  7. How does the announcement seek to resolve this competition?

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