Moves by the Australian Tax Office to go after those employers not paying their workers super are welcome but barely scratch the surface of the problem Industry Super Australia (ISA) says.
With ISA analysis showing that one in three workers – around 2.85 million people – are being ripped off close to $6 billion in super by unscrupulous employers, the ATO’s compliance action relating to 25,000 people will only deal with less than 1 per cent of employees currently missing out on their super.
This means 2.825 million workers will continue to have their super stolen by dodgy employers while nothing is done.
This occurs because super is only required to be paid into a worker’s account quarterly, meaning it is easy for payments to fall through the cracks and for unscrupulous employers to deliberately hang on to the money to undercut their competitors.
While workers’ might think super has been paid into their account because it appears on their payslip, there is currently no legal requirement that it gets paid into their super account at the same time as their salary is paid.
That’s why to fix this problem at its source, 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 per cent 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.
In fact, the ATO has not issued a single maximum 200 per cent penalty in the past five years, according to evidence provided at Senate Estimates in April this year.
To truly fix the problem, there must not only be tougher compliance, but the law must be changed to make super payable on pay day.