Does my Employer need to pay my Superannuation whilst on Workers Compensation?

KEY TAKE-OUTS

• The Superannuation Guarantee enforces employers to make payments to their employee’s Superannuation funds.
• Superannuation is permitted to be paid as stated under various legislation including Superannuation Guarantee (Administration) Act 1992 and the Fair Work Act 2009.
• Superannuation is not always guaranteed whilst on workers compensation. There are some exceptions to this rule.

The basic rule of superannuation

Under legislation, every worker is entitled to a percentage of Superannuation on top of their wages, payable by their employer to their superannuation fund. Superannuation or ‘Super’ was born out of the government’s ideas of lowering dependency on pensions and encouraging a retirement fund, funded by employers. Super can become a difficult topic if you are claiming workers compensation against your employer.

Is Superannuation Paid on Workers Compensation

As noted by the Australian Tax Office (ATO), if an employee is on workers compensation, the employer does not automatically need to make superannuation payments. However, there are some exceptions to the rule.

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When will you get super benefits on workers compensation?

Typically, Super is not payable on workers compensation claim. The exceptions are:

1. if the Modern Award an employee is covered under states that super is to be paid; or
2. if the employee falls under an enterprise agreement, which specifies that Super is still to be paid whilst on workers compensation.

The justification that Super is not generally payable whilst on workers compensation is because workers compensation payments from an insurer are not defined as ordinary time earnings (OTE) for the purposes of Super. However, if the worker has a partial capacity to work, and is being paid by the employer for these hours, these will be considered as OTE and therefore, Super will be payable on this amount only.

Whilst the above rule is the most common, there are some Modern Awards that allow for Super to be paid whilst the worker is off work due to an injury. For example, Clause 21.5 of the Fast Food Industry Award 2010 places the obligation on the employer to pay Super whilst the employee is on workers compensation. This clause is subject to certain conditions, such as it only applying for a maximum of 52 weeks.

Similarly, some employees are covered under an enterprise agreement, which may also include additional provisions for Super to be paid whilst off work due to injury.

Ultimately, whether an employee should continue to be paid their Super entitlements whilst on workers compensation is dependent on the terms of their applicable Modern Award or enterprise agreement. It can also depend on the contractual arrangement between the employee and employer.

If you are wanting further advice regarding your specific entitlement to superannuation while on workers compensation or any workers compensation related advice, we highly recommend reaching out to the team at Coutts.

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