- Who the superannuation guarantee applies to
- Duty one: pay the right amount of super
- Duty two: pay super on time, on every payday
- Duty three: pay to the right fund
- Duty four: make the contract match the payroll
- What happens if you miss a payment: the super guarantee charge
- A checklist before your next pay run
- Where a lawyer and an accountant fit
- The contract and payroll mismatch
Offering an employee salary plus super is one of the most common remuneration arrangements in Australian small business, and one of the easiest to get wrong. The phrase means the advertised salary is paid as cash and, on top of it, the employer pays superannuation guarantee (SG) contributions at the rate the law requires. That rate is currently 12% of the employee's qualifying earnings, and since 1 July 2026 those contributions must be paid on every payday rather than once a quarter.
This guide sets out who the SG obligation applies to, the four duties that come with paying salary plus super, what happens when an employer misses a payment, and a short checklist to run before your next pay run.
Who the superannuation guarantee applies to
Your SG obligation starts the moment you engage someone who is an employee for superannuation purposes. That covers full-time, part-time and casual staff, and it extends further than the ordinary meaning of "employee". Under s 12 of the Superannuation Guarantee (Administration) Act 1992 (Cth) (the SGAA), a person engaged under a contract that is wholly or principally for their labour counts as an employee for SG purposes even if they are billed as a contractor. The same extended definition captures directors who are paid for board work.
One threshold change catches businesses that have not updated their payroll settings. The old $450 per month threshold was removed from 1 July 2022, so you owe SG for any eligible employee regardless of how little they earn in a month, including casuals on short shifts.
The obligation is triggered by paying qualifying earnings (explained below) and applies from the first dollar up to a cap. For 2026-27 the maximum contribution base is $270,830 a year. Once an employee's qualifying earnings pass the cap in a financial year, you can stop paying SG for them for the rest of that year.
Duty one: pay the right amount of super
Under the Payday Super regime that applies to earnings paid from 1 July 2026, SG is calculated on the employee's qualifying earnings. Section 10A of the SGAA defines qualifying earnings to include ordinary time earnings (OTE), commissions, and payments for labour under a contract caught by s 12(3). For a straightforward salary employee, qualifying earnings will usually be the gross salary itself, so the 12% figure is easy to work out. An $80,000 salary plus super costs $9,600 a year in SG, or around $800 a month for a monthly paid employee, on top of the salary.
OTE, the base component of qualifying earnings, is defined in s 6 of the SGAA as earnings for ordinary hours of work, including over-award payments, shift loadings and commission. It does not include overtime, and it does not include lump sums paid on termination such as payment for unused annual leave or long service leave. Where payroll is set up correctly, the super line on each payslip is simply 12% of that pay's qualifying earnings.
A few situations change the numbers:
- Commissions: commissions count as qualifying earnings under s 10A. Bonuses are a greyer area depending on how they are structured, so check how your payroll treats each payment type before you promise a variable pay arrangement.
- Salary sacrifice: amounts an employee sacrifices into super still count towards your SG obligation. Section 10A includes the sacrificed amount in qualifying earnings, so you cannot reduce your own SG cost by structuring the pay this way.
- Maximum contribution base: once qualifying earnings for the year pass $270,830 (2026-27), you stop owing SG for that employee for the rest of the financial year.
Duty two: pay super on time, on every payday
This is the biggest change for employers. Under Payday Super, which started on 1 July 2026, SG contributions must reach the employee's fund within 7 business days of the day you pay the employee's wages. The ATO calls that payday the "QE day", meaning the day qualifying earnings are paid. The simplest way to stay compliant is to pay the super at the same time you run the payroll.
Two timing details catch employers out:
- First contribution: the first SG payment for a new employee, or the first payment to a new fund, has an extended deadline of 20 business days after the payday.
- Business days: a day that is a public holiday anywhere in Australia is not a business day for this purpose, even if your state is not the one having the holiday.
For earnings paid up to 30 June 2026, the old quarterly system applied, with contributions due 28 days after the end of each quarter. If you are still cleaning up missed quarters from before 1 July 2026, those are assessed under the quarterly rules.
Duty three: pay to the right fund
The employee generally chooses which complying super fund receives their SG. Section 32N of the SGAA requires you to give a standard choice form within 28 days of an employee starting with you, and again when the employee asks (at most once every 12 months) or when their chosen fund ceases to be available. If the employee does not choose, you pay to a default fund that meets the legal requirements.
The ATO also treats a contribution as on time only if it is received by the fund with all the information needed to allocate it to the employee's member account. If the money arrives but cannot be matched to the employee, it does not count as a valid SG payment.
Duty four: make the contract match the payroll
"Salary plus super" has a settled commercial meaning: the salary figure is exclusive of super, and super is paid in addition. The risk is not usually the phrase itself. It is drafting that looks like one model but operates like another. If your job ad says "salary plus super" but the offer letter says "total remuneration package inclusive of super", you have created ambiguity that a court or the Fair Work Commission would have to resolve if the arrangement is ever disputed.
The contract should state, in plain terms, that the salary is exclusive of superannuation, that SG is paid in addition at the rate required by law, and how bonuses, commissions and allowances are treated. The same wording should appear in the job ad, the offer letter and the final contract. Then the payroll categories need to match. If the contract says salary plus super but the payroll system processes the figure as a package inclusive of super, every pay run is quietly underpaying the employee's super.
A salary plus super arrangement also does not exempt you from award obligations. If the employee is covered by a modern award or enterprise agreement, the cash salary must still satisfy the applicable minimum rates and conditions, or be set up as a compliant annualised salary. An award-covered employee paid below the minimum is underpaid regardless of how the super is described.
What happens if you miss a payment: the super guarantee charge
If an SG contribution is not received on time, you become liable for the super guarantee charge (SGC) under Part 3 of the SGAA. The SGC is not a top-up payment you can make instead of the contribution. It is a charge payable to the ATO made up of:
- Base shortfall: the unpaid SG amount itself,
- Notional earnings component: effectively interest at the general interest charge rate on the shortfall from when the payment should have been made (s 19A),
- Administrative uplift: 60% of the shortfall and interest (s 19B), and
- Choice loading: applies where the employee had no effective choice of fund.
Even a late contribution that arrives before the ATO assesses the charge can reduce the SGC, but the notional earnings, administrative uplift and choice loading components can still apply. The unpaid charge itself also attracts the general interest charge under s 49 of the SGAA.
The SGC is paid to the ATO, not into the employee's super account. The missed super still needs to be made good for the employee to actually receive it, and the ATO can assess, recover and audit the charge against your records. Getting an SGC assessment is also a signal that the wording of your contracts and the setup of your payroll need to be reviewed, because the same mistake will usually repeat every pay period.
A checklist before your next pay run
Run through each of these checks before you process the next pay run:
- Confirm the rate: 12% of qualifying earnings for every pay period since 1 July 2025.
- Check the base: make sure commissions and allowances your payroll treats as OTE are included, and overtime is not.
- Time the payment: contributions must reach the fund within 7 business days of payday, so run super with the payroll rather than after it.
- Match the documents: job ad, offer letter and contract should all say the same thing: salary exclusive of super, super in addition.
- Update the fund details: pay to the employee's chosen fund, or a compliant default, with the data needed to allocate the money.
- Check the cap: once qualifying earnings pass $270,830 in 2026-27, no further SG is required for that employee that year.
- Review new starters: the first contribution for a new employee or new fund gets 20 business days, but later ones do not.
Where a lawyer and an accountant fit
A salary plus super arrangement touches contract law, tax and workplace relations, and each professional has a distinct role. An accountant or payroll professional can confirm the super base for each payment type and configure the payroll system so the numbers are right from the first pay run. A lawyer is usually needed where the structure is not a simple salary: drafting contract wording that clearly fixes what the salary covers, reviewing annualised salary arrangements for award-covered staff, working out whether a contractor arrangement is genuinely outside the extended employee definition in s 12 of the SGAA, and fixing the contract and payroll after a missed payment or an SGC assessment has already occurred.
The contract and payroll mismatch
Of the four duties, the one that most often loses real money is not the timing. It is the quiet mismatch between the figure on the contract and the way the payroll system actually processes it. A contract that says salary plus super alongside a payroll that treats the figure as a package produces a small underpayment of super on every single pay, which compounds into a large shortfall, an SGC liability and a dispute with an employee who has noticed the gap between what was promised and what has landed in their fund. Before your next pay run, open the contract, the offer letter and the payroll categories together and check that all three say the same thing. If they do not, fix the documents before the next payment is due, because the deadline for that payment is only seven business days after payday.