Superannuation payment percentage increased, employee sponsorship possibly affected

 IMPACT – MEDIUM

The Australian government increased the mandatory superannuation payment percentage for employees from 10% to 10.5% on July 1.

Key Points:

• An increase in the superannuation payment may cause a decrease in annual take-home earnings for many employees.
• When sponsoring Subclass 457 or 482 visa holders, sponsors specify the “base” remuneration the visa holder will receive in the nomination. This “base” remuneration figure is exclusive of superannuation.
• Some organizations may wish to deduct the increased superannuation amount from the total earnings of employees; however, this may result in a breach of the sponsorship obligations with regard to sponsored visa holders.
• Sponsors should be cautious not to reduce the “base” remuneration of the sponsored visa holder below the level stipulated in the nomination in response to the increase in superannuation payable by the employer.

BAL Analysis: A drop in an employees’ annual earnings from an approved 457 or 482 nomination means that a business may be breaking its sponsorship obligations required by law. This kind of breach in obligation has the potential to affect a business’ ability to sponsor foreign nationals in the future, and responsible parties may face financial and/or criminal penalties. Sponsors should ensure that any change to superannuation does not decrease the payments to sponsored visa holders below the level stipulated in the nomination. If unsure, sponsors are encouraged to consult their immigration provider before lowering annual earnings.

This alert has been provided by the BAL Global Practice group. For additional information, please contact berryapplemanleiden@bal.com.

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