Mandatory superannuation payments for employees increased from 9.5% to 10% today, 1 July 2021. This mandatory payment increase has the potential for sponsors to breach their employer payment obligations for foreign nationals, in particular guaranteed annual earnings offered which are inclusive of superannuation.
Important points to note:
- An increase in the superannuation payment may cause a decrease in annual take-home earnings for many employees.
- When sponsoring Subclass 457 or 482 visa holders, sponsors specify the “base” remuneration the visa holder will receive in the nomination. This “base” remuneration figure is exclusive of superannuation.
- Some organisations may wish to deduct the increased superannuation amount from the total earnings of employees. However, this approach may result in a breach of the sponsorship obligations with regard to sponsored visa holders.
- Sponsors should be cautious not to reduce the “base” remuneration of the sponsored visa holder below the level stipulated in the nomination in response to the increase in superannuation payable by the employer.
Offered salary in employment contract prior to 1 July 2021: $100,000.00 (inclusive of 9.5% superannuation)
Nominated base salary for Subclass 457/482 visa: $91,324.20
Base salary paid to employer from 1 July 2021: $90,909.09
A drop in an employees’ annual guaranteed earnings from an approved 457 or 482 nomination means that a business may be breaching its sponsorship obligations required by law. This kind of breach in sponsorship obligation has the potential to affect a business’s ability to sponsor foreign nationals in the future, and responsible parties may face financial and/or criminal penalties. Sponsors should ensure that any change to superannuation does not decrease the payments to sponsored visa holders below the level stipulated in the nomination. If unsure, sponsors are encouraged to us immediately before lowering annual earnings.