Subclass 457 Visa Compliance: Compulsory Retirement Contribution Rate Increases on July 1
May 21, 2014
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Australia’s compulsory employer superannuation contribution rate – the amount employers are required to contribute toward employee retirement funds – will increase 0.25 percent to 9.5 percent on July 1, 2014 as part of a program of increases designed to raise the rate to 12 percent by 2020. This superannuation rate last increased, by 0.25 percent, on July 1, 2013.
Employers who choose to reduce the salary component of the total salary package of a foreign national rather than increase the package by 0.25 percent (providing this is permitted under the employment contract) will need to notify Department of Immigration and Border Protection of the change. Before making any decision to reduce the salary component, an employer must ensure that the adjusted salary will continue to satisfy the market rate requirement.
What This Means for Employers
Employers should develop strategies for how they will account for increases in superannuation contribution rates. Employers should also review their subclass 457 visa holders’ contracts of employment to determine whether the contracts permit them to adjust employees' salaries to account for higher superannuation rates. Employees will need to be notified of the change in superannuation rates and how it will impact them.
Employers that take on the expense of additional superannuation payments will not be required to take any action. A new subclass 457 nomination will only be required if the salary component of the salary package is reduced to accommodate for the increase in superannuation contribution rate.
How Fragomen Can Assist
Fragomen can assist clients with evaluating salary levels for compliance with immigration requirements. Fragomen also assists companies with preparing and filing subclass 457 nominations to notify the Department of Immigration and Border Protection of any downward changes in foreign workers salary.
This alert is for information purposes only. If you have any questions, please do not hesitate to contact the global immigration professional with whom you work at Fragomen or send an email to [email protected].
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