The 2014 budget may affect many different aspects of your business. Here are 2 changes that may affect both staff and employers.
1. Superannuation Guarantee increase delayed
Effective from 1 July 2014, the Superannuation Guarantee percentage has increased to 9.5% from the current 9.25%.
The Superannuation Guarantee percentage will gradually rise to 12 % by July 2022,
Superannuation Guarantee is the official term for compulsory superannuation contributions made by employers on behalf of their employees. An employer, whether they are a small or large business, must at this time, contribute the equivalent of 9% of an employee’s salary.
The new increases are laid out in the table below:
|
Financial year
|
Superannuation guarantee
|
|
July 2014-June 2015
|
9.5%
|
|
July 2015-June 2016
|
9.5%
|
|
July 2016-June 2017
|
9.5%
|
|
July 2017-June 2018
|
9.5%
|
|
July 2018-June 2019
|
10.0%
|
|
July 2019-June 2020
|
10.5%
|
|
July 2020-June 2021
|
11.0%
|
|
July 2021-June 2022
|
11.5%
|
|
July 2022-June 2023
|
12.0%
|
The Superannuation Guarantee has financial implications for anyone planning to remain in the workforce for more than 7 years as the increase of 3% will take full effect in just over 6 years’ time. According to the Federal Government, the 33% increase will give a 30 year old on average full time wages an extra 108, 000 in retirement savings.
2. Changes to the Fair Entitlement Guarantee
One of the other important changes the 2014 federal budget delivered was alterations to the fair Entitlements Guarantee, which guarantees several unpaid employee entitlements in the event of insolvency or bankruptcy.
From January 1 2015 the maximum payment for redundancy pay will be 16 weeks. Previously redundancy pay was capped at 4 weeks’ pay per full year of service. From 1 July 2014, indexation of the maximum weekly wage used in calculating entitlements for claimants earning above the maximum weekly wage of $2,451 will be paused until 30 June 2018.
The changes will apply only to liquidations and bankruptcies that occur on or after the commencement date of 1 January 2015.
Employees seeking to claim an entitlement above the maximum will maintain rights as unsecured creditors to recover any outstanding entitlements through the winding up of their employer’s business.
The Government will achieve savings of $87.7 million over four years by aligning redundancy payments under the Fair Entitlements Guarantee scheme to the National Employment Standards contained in the Fair Work Act 2009.
The savings from this measure will be redirected by the Government to repair the Budget and fund policy priorities.