Superannuation: Are You Paying Your Employees and Contractors Correctly?

01 FEB 2021


From 1 July 2021, the superannuation guarantee rate will increase to 10%.

What is the current superannuation guarantee rate?

At present, and up until 30 June 2021, the superannuation guarantee rate is 9.50%.

What is the ‘superannuation guarantee’?

The Superannuation Guarantee (Administration) Act 1992 (Cth) requires employers to make a contribution on behalf of each of their eligible employees and eligible contractors to help them save for their retirement. That is known as the compulsory superannuation guarantee.

The Federal Government initially introduced reforms to the superannuation guarantee in 2011. Those reforms will see a progressive increase in the superannuation guarantee rate to 12% by 2025.

The table below shows the progressive increase in the superannuation guarantee rate until it reaches 12% in 2025:


Super guarantee rate

1 July 2014 – 30 June 2021


1 July 2021 – 30 June 2022


1 July 2022 – 30 June 2023


1 July 2023 – 30 June 2024


1 July 2024 – 30 June 2025


1 July 2025 – 30 June 2026


In accordance with the Federal Government’s reforms, the first stage of the increase to the superannuation guarantee rate will commence on 1 July 2021 with the minimum superannuation guarantee increasing from 9.50% to 10%. Thereafter, the minimum superannuation guarantee will increase by 0.50% each subsequent financial year until it reaches 12% on 1 July 2025.

Do contractors have to pay their own superannuation, or do I have to pay their superannuation?

The answer depends on a case-by-case basis.

If a person is a contractor, and if you pay them wholly or principally for their labour, they may be considered an ‘employee’ for superannuation purposes and you may have to pay them the superannuation guarantee under the same rule as ordinary employees.

A contractor may be considered contracted ‘wholly or principally for their labour’ if:

  • they are paid wholly or principally for their personal labour and skills;
  • they perform the contract work personally; and
  • they are paid for hours worked, rather than to achieve a result.

This is assessed on a case-by-case basis, and often requires advice.

How can Marsdens help?

If you have questions about if you are paying your employees the correct superannuation guarantee rate, or if you have questions regarding whether your contractors should be paid superannuation by your business, please contact Aaran Johnson on or Simon Kumar on or by phoning 02 4626 5077 for an initial discussion.

The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.

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