Home - Changes in financial year to superannuation & unfair dismissal laws

UpdatesJun 30, 2022

Changes in financial year to superannuation & unfair dismissal laws

The new financial year is fast approaching, and with it are coming important changes in financial year in two areas of the industrial law space.

Changes to superannuation

From 1 July 2022, there will no longer be a requirement for employees to earn at least $450 gross a month to be eligible for Superannuation Guarantee contributions. However, you still only need to pay superannuation for workers aged under 18 when they work more than 30 hours in a week.

The Superannuation Guarantee rate will increase from 10% to 10.5% on 1 July 2022. You’ll need to use the new rate to calculate super on payments you make to employees on or after 1 July, even if some or all of the pay period is for work done before 1 July.

The maximum superannuation contribution base for 2022–2023 will be $60,220 per quarter or $240,880 per year. This means the maximum amount of Superannuation Guarantee contributions per quarter will be $6,323 ($60,220 x 10.5%).

The Superannuation Guarantee rate is legislated to increase to 12% by 1 July 2025. The Federal Government is supportive of the rate continuing to increase by increments thereafter to 15%.

Employers should be careful if they seek to reduce base salaries to absorb the increase in the amount of superannuation that must be contributed. If the employment contract requires a specified amount to be paid for salary, any reduction of this amount without the employee’s consent may amount to breach of employment contract and lead to claims of constructive dismissal. However, if remuneration is specified as a package amount inclusive of super, this is usually regarded as authorising an offset of salary against the increase in superannuation.

Changes to unfair dismissal laws

The unfair dismissal threshold will increase on 1 July to $162,000. The maximum amount of compensation that can be ordered by the Fair Work Commission in an unfair dismissal case will also increase to $81,000 for dismissals occurring on or after 1 July 2022.

When calculating the tax-free component for genuine redundancy and early retirement schemes in 2022–2023, adopt a base limit of $11,591 and add $5,797 for each year of service completed by the employee.

The employment termination payment cap for death and life benefits has increased for 2022–2023 to $230,000.

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