“Dodgy bosses” who underpay superannuation to face higher penalties and court action under Labor plan


Opposition leader Bill Shorten. Source: AAP/Lukas Coch.

Employers will face steep fines and the prospect of legal action if they fail to pay their workers correct superannuation entitlements if Labor wins government next year.

Speaking at Labor’s national conference on the weekend, opposition leader Bill Shorten said bosses who steal superannuation payments should face tougher penalties.

“Dodgy bosses who deliberately avoid paying their workers superannuation are breaking the law. It’s theft. If I’m PM, they will be punished to the full extent of the law,” Shorten said yesterday.

If elected, Labor will change the rules to include superannuation in the National Employment Standards, which will give workers the power to pursue employers for unpaid super through the courts.

Currently, unless covered by specific award or enterprise agreement provisions, workers aren’t able to chase unpaid super because it’s technically owed to the ATO, not them.

Tax office compliance will also be strengthened, putting businesses on the hook for penalties equal to the outstanding super because of a false or misleading statement.

Employers who fail to inform the ATO about unpaid superannuation when asked will face even steeper fines of up to 300% of unpaid super.

Unpaid super was estimated at $5.9 billion in 2015-16 by Industry Super Australia (ISA), with nearly three million workers experiencing non-payment or underpayment.

The ATO estimated the superannuation guarantee gap, which is the difference between the value of super contributions and what’s required to be paid under law, was about $2.79 billion in 2015-16.

Superannuation compliance has come under scrutiny in Canberra recently as complaints about employers underpaying have skyrocketed by more than 56%.

Under reforms passed by the government in the final sitting week of the year, the ATO has also been given stronger powers to compel employers to pay unpaid superannuation guarantee entitlements and also undertake education courses.

The Morrison government has also been considering reforms that would see employers given a one-off 12-month amnesty to correct historical superannuation underpayment or non-payment.

Paul Drum, general manager of policy and advocacy at CPA Australia, tells SmartCompany the tougher laws would set a new penalty record.

“We expect that many employees will view the proposed new penalties as a welcome addition to those that are already in place,” he says.

“Employers, however, will be much more circumspect. The proposed penalties in particular, the proposal of a 300% penalty for the worse possible cases — sets a new penalty record.

“For example, currently, tax and SG penalties can be as high as 200% of the tax avoided but not 300 per cent.”

Drum says while the underpayment of super is a problem, the adoption of Single Touch Payroll is already set to solve many outstanding issues.

ISA welcomed Labor’s announcement in a statement released today.

“The Opposition’s commitment to include super in the National Employment Standards (NES) will make it crystal clear to employers and employees what their respective responsibilities and rights are,” Bernie Dean, chief executive of ISA, said.

Dean says further changes are needed though, including reforms to require businesses to pay super contributions at the same time as salaries.

“When employers don’t pay super everyone pays — from the worker who is poorer in retirement, and the taxpayer who funds increased age pension costs, through to law-abiding employers who are competing on an unlevel playing field.”

Shorten also re-confirmed Labor’s commitment to a host of industrial relations changes over the weekend, including restoring penalty rates, cracking down on labour-hire firms and introducing a “stronger test” for the definition of casual employment.

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