3rd July 2024

The increase to the superannuation guarantee (SG) rate from 1 July 2024 will see more employees (and certain contractors) entitled to additional SG contributions on their pay. But what happens when income earned before 30 June is paid after 30 June 2024 – will employees be entitled to the higher SG rate of 11.5%?

SG is based on when an employee is paid

On 1 July 2024, the SG rate increased from 11% to 11.5%. In some cases, an employee’s pay period will cross over between June and July when the rate changes.

However, the percentage employers are required to apply is determined based on when the employee is paid, not when the income is earned. The rate of 11.5% will need to be applied to all ordinary time earnings (OTE) that are paid on and after 1 July 2024, even if some or all of the pay period it relates to is before 1 July 2024.

This means if the pay period ends on or before 30 June, but the pay date falls on or after 1 July, the 11.5% SG rate applies on those salary and wages. The date of the salary and wage payment determines the rate of SG payable, regardless of when the work was performed.

Example

George is an employee of XYZ Pty Ltd.

If George performed work:

• In June (or partly in June and partly in July) but he was paid in July, the SG rate is 11.5% on his entire payment and contributions, totalling 11.5% of his OTE for the September 2024 quarter. This must be made to his superannuation fund by 28 October.
• In July, but was paid in advance (before 1 July), the SG rate is 11% and contributions totalling 11% of his ordinary time earnings for the June 2024 quarter must be made to his superannuation fund by 28 July.

SG rate will continue to rise

Employers should prepare for one last increase to the SG rate which is already legislated to rise to 12% by 2025. As can be seen in the table below, the SG rate has been increasing incrementally each year and will stop when it reaches 12% on 1 July 2025:

 Basis of SG

SG is only payable on a workers’ OTE. OTE is the amount you pay employees for their ordinary hours of work, including things like commissions and shift loadings, but not in relation to overtime hours (being those outside the ordinary hours stated in a worker’s award or other employment agreement).

More information?

If you are still uncertain around the application of the new SG rate or need guidance on which payments constitute OTE, reach out to us.