Moves by the Australian Taxation Office (ATO) to go after employers not paying their workers superannuation are welcome, but barely scratch the surface of the problem, Industry Super Australia (ISA) says.
ISA analysis has shown that one in three workers — about 2.85 million people — are being ripped off by almost $6 billion in super by unscrupulous employers not paying their full entitlements.
The ATO’s recent move against 25,000 employers not meeting their super commitments will deal with fewer than 1% of employees currently missing out on their super, ISA said in a statement.
“This means 2.825 million workers will continue to have their super stolen by dodgy employers while nothing is done,” said ISA chief Bernie Dean.
Unethical employers are getting away with underpayments or non-payment because super is only required to be paid into a worker’s account quarterly, ISA believes.
The time lapse between wage payments (made fortnightly) and super payments makes it easy for unscrupulous employers to deliberately hang on to the money to undercut their competitors.
There is currently no legal requirement that it gets paid into their super account at the same time as their salary is paid.
As a result, workers may think super has been paid into their account because it appears on their payslip when it has not.
To address this issue, ISA believes the law needs to change to align the payment of super with wages.
Research conducted by UMR confirms Australians overwhelmingly support aligning the payment of super with wages, with 89% of people surveyed agreeing employers should have to pay super at the same time as salary.
While ISA supports an increase in compliance activity, it is critical that it is backed up by penalties that reflect the full weight of the law.
“To date, the ATO’s track record when it comes to handing down maximum penalties to those employers caught stealing their employees’ super has been negligible at best,” the ISA statement said.
The ATO has not issued a single maximum 200% penalty for non-payment of super in the past five years, according to evidence provided at Senate estimates in April, ISA said.
To fix the problem, there must not only be tougher compliance, but the law must be changed to make super payable on payday.
“The only way to stop a third of Australia’s workforce having their super stolen is for the Parliament to change the law and make super payable on payday,” Mr Dean said.
“Increased compliance is welcome, but the ATO must apply the full force of the law to these rogue employers.
“Australians rightly expect to be paid their legal super entitlement. The fact that one in three workers are being robbed of their super each year in this day and age is extraordinary and must be fixed.
“Federal politicians have their super paid on payday — it’s time that same protection was extended to all Australians.”
This article was first published by The New Daily, which is owned by Industry Super Holdings.