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Re: Super Guarantee paid on Workers compensation payment under award MA000020 Building & Constru

Newbie

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Replies 8

We have a full-time employee now on workers comp. NSW WorkCover averaged his weekly earnings to $1,883 gross - that's made up of $1,400 base + $483 overtime (averaged over 52 weeks).
Under super laws, Super Gtee 9.5% is paid on OTE AND Workers' comp payments made by an employer if the employee is required to work.

Our employee is not fit to return to work yet.

FairWork Ombudsman website advises that the award we're under provides an exception to the Super G'tee law.

We're under the award MA000020: Building & Construction and clause 32.5 (b) (i) & (ii) states:  

...."the employer must also make the superannuation contributions:

(b) Work-related injury or illness—for the period of absence from work (subject to a maximum of 52 weeks) of the employee due to work-related injury or work-related illness provided that:

(i) the employee is receiving workers compensation payments or is receiving regular payments directly from the employer in accordance with the statutory requirements; and

(ii) the employee remains employed by the employer."

The above clause does not clearly state this is applicable only if the employee is required to work.

Does the above clause imply that we do pay 9.5% on the total workers comp. payment $1,883?  
The insurance company advised us they don't take super into account. It's the employer's responsibility & we are not compensated.  

Prior to injury, we paid 9.5% on $1,400 base as overtime is not OTE. It does not make sense

 

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Most helpful response

Former Community Support

Replies 7

Hi @JoBarrington,

 

Firstly, I would recommend looking at this thread for a nice breakdown of how and when SG is paid on workers’ compensation payments.

 

You were correct in using ordinary time earnings to calculate the minimum super guarantee contributions for your eligible employee prior to injury. However, some awards have extra terms about superannuation and can affect how you apply the superannuation guarantee.

 

According to the Fair Work website, under the Building and Construction Award, superannuation needs to be paid during periods of leave while on workers compensation if the employee:

  • can't work because of a work-related injury or illness
  • is getting paid workers compensation payments or regular payments from their employer
  • is still employed by their employer.

 

The information would indicate you continue to pay SG as you did previously on the base, but like you said, it doesn’t specify whether it includes the overtime payment or just the base. It would be best to contact Fair Work for an explanation on how the extra superannuation terms on top of the superannuation guarantee in your award affect how you calculate the SG.

 

All the best,
Dejan

8 REPLIES 8

Most helpful response

Former Community Support

Replies 7

Hi @JoBarrington,

 

Firstly, I would recommend looking at this thread for a nice breakdown of how and when SG is paid on workers’ compensation payments.

 

You were correct in using ordinary time earnings to calculate the minimum super guarantee contributions for your eligible employee prior to injury. However, some awards have extra terms about superannuation and can affect how you apply the superannuation guarantee.

 

According to the Fair Work website, under the Building and Construction Award, superannuation needs to be paid during periods of leave while on workers compensation if the employee:

  • can't work because of a work-related injury or illness
  • is getting paid workers compensation payments or regular payments from their employer
  • is still employed by their employer.

 

The information would indicate you continue to pay SG as you did previously on the base, but like you said, it doesn’t specify whether it includes the overtime payment or just the base. It would be best to contact Fair Work for an explanation on how the extra superannuation terms on top of the superannuation guarantee in your award affect how you calculate the SG.

 

All the best,
Dejan

Newbie

Replies 6

Hi @Dejan 

 

Thank you for your reply.  This has certainly been a learning curve.  

 

FairWork told me that all Superannuation enquiries are to go to the ATO.  My questioning has become a hot potato that nobody wants to deal with.

 

Under the Super Guarantee Law SGR 2009/2, it states that workers compensation payments, including top up payments where no work is being performed by an employee are not included in an employee's OTE for the purpose of calculating payment of super.

 

Yes, the award we are under appears to provide an exception.  Our struggle is with the terminology of the MA000020: Building & Construction award.  If you read clause 32.5 (b) in it's entirity, I'm questioning 32.5(b)(ii) 'the employee remains employed by the employer" - what do they mean exactly?  Does the wording "remains employed" mean the same as "work being performed"?

 

Then of course it comes back to having the overtime averaged within his workers comp payment that suddenly creates extra cost of super guarantee being calculated.

 

Any further guidance regarding this will be greatly appreciated.

ATO Community Support

Replies 5

Hi @JoBarrington,

 

The Employers Super Guarantee table on our website says workers comp not working, you DO NOT pay SG. Workers comp returned to work you DO pay SG.

 

The table -

Payment

Salary or wages

Ordinary time earnings (OTE)

Reimbursement

No

No

Petty cash

No

No

Reimbursement of travel costs

No

No

Payments for unfair dismissal

No

No

Workers' compensation: returned to work

Yes

Yes

Workers' compensation: not working

No

No

 

There are 2 separate columns. The Salary and wages column is if it is paid late. The OTE column is when it is paid on time. As you can see, the workers comp not working is a NO in both columns.

 

Hope this helps.

 

Regards,

Jodie2. .

Newbie

Replies 4

Hi Jodie

 

Thank you. Unfortunately this has become more complicated as the award we are under conflicts with this.  In saying that, the award we are under has been so poorly written that it could be read in two different aspects.

I've lodged a formal enquiry with FairWork as it's now become more of an award 'interpretation' and we've requested a decision be made.

I will update this discussion when we have clarity. 

Newbie

Replies 3

UPDATE:   Response received from FairWork. 

NOTE:  This is specific to MA000020 Building and Construction award.  I'll do a recap, so the advice from FairWork makes sense to those reading this.  

Under super laws, Super Gtee 9.5% is paid on OTE AND Workers' comp payments made by an employer if the employee is required to work.
Our employee is not fit to return to work yet.
FairWork Ombudsman website advises that the award we're under provides an exception to the Super G'tee law.
We're under the award MA000020: Building & Construction and clause 32.5 (b) (i) & (ii) states:
...."the employer must also make the superannuation contributions:
(b) Work-related injury or illness—for the period of absence from work (subject to a maximum of 52 weeks) of the employee due to work-related injury or work-related
illness provided that:
(i) the employee is receiving workers compensation payments or is receiving regular payments directly from the employer in accordance with the statutory requirements;
and
(ii) the employee remains employed by the employer."

 

FAIRWORK ADVISED THE FOLLOWING:

"The term 'employee remains employed by the employer' does not necessarily mean work is being performed. As long as the employee is still employed, ie. has not been terminated or resigned. If you have an employee on workers compensation that is not attending work but is still employed, they would meet the definition under Clause 32.5 meaning they would have an entitlement to superannuation."

 

In addition to the above advice, I told FairWork that NSW WorkCover averaged our employee's weekly earnings to $1,883 gross - that's made up of $1,400 base + $483 overtime (averaged over 52 weeks).  So prior to injury, we paid 9.5% on $1,400 base as overtime is not OTE.  I asked FairWork, does the above clause 32.5 imply that we pay 9.5% on the total workers comp. payment $1,883?

 

FAIRWORK ADVISED THE FOLLOWING:

For your reference, we can only advise on the award clause for superannuation, any further questions outside the scope of that clause would need to be directed to the ATO. 

 

To sum up, I believe the award itself has been written without any consideration to averaged earnings for Workers Compensation. Neither FairWork or the ATO have given a definitive "yes" you must pay Super on the additional amount of his base salary. 

 

The company I work for has made the decision that we'll pay Super Guarantee on the total Workers Comp payment as we don't want to be breaking any empoyment laws.  We've wasted so much time trying to get this right.

 

Thank you to everyone who has attempted to help me with this enquiry.

I'm new

Replies 2

Hi @JoBarrington ,

I wish I had seen this thread sooner, as it may have saved me a lot of time and confusion!

We have an employee who injured themselves in August 2019. Workcover averaged the employees' earnings over 52 weeks, including a great deal of OT and allowances, which would usually not attract super. Trying to reason with them over this is an effort in futility! Long story short, our employee has worked ~6 weeks since August 2019 and has been getting paid far more than the 'average' wage from Workcover each week. After a second surgery and extensive rehab, the employee was placed with a host employer in November 2020, however they are still employed by us.

Our employee contacted me in November to ask why their super hadn't been paid since going onto Workcover. Until that phone call, I had absolutely no idea that it was even a requirement! I contacted Fair Work and was told the same thing as you Jo, and it blew my mind! 
After explaining that the employee is now with a host employer, I was told that we still have an obligation to pay their super, calculated at 9.5% of OTE, despite the employee currently being paid by a host employer.

I don't know if I've been living under a rock or if this information is just not common knowledge? Trying to decipher the different legislation that COULD be applicable and the ambiguity between legislation and the award and then navigating the discussions between Workcover and Fair Work has been an absolute nightmare.

T
here is no definitive answer on this, and my employer also made the decision that the best course of action was to pay it and get it squared away. We've had to lodge a Superannuation Guarantee Charge Statement for the late payment of super over almost 18 months and will most likely have to pay late fees and interest as a result of this. It's certainly not an ideal outcome and I'm feeling very sheepish that I was not aware of this information.

It has definitely been a learning curve!

I'm new

Replies 1

I don't know if this is of any help to your situation......but WorkCover takes over after the first 12 months

https://rctlaw.com.au/legal-blog/2021/workcover-continues-to-pay-superannuation-to-injured-workers

Newbie

Replies 0

Thank you

It should be noted that WorkCover do not pay the Employer the cost of Super in the first 12 months - only the cost of the wage.  Under the Building & Construction NSW award, it's a requirement of the Employer to continue paying the Super for the Employee whilst on workers comp.

Due to the all the buck passing between the ATO, FairWork & iCare the way we've resolved this is to have iCare deal direct with our injured worker.  This puts the pressure on iCare to be proactive & 100% responsible for ensuring our employee is promptly paid & we aren't weighed down with as much paperwork.