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Home >> Frequently Asked Questions >> How Do I Set Up An Employee With Salary Inclusive Of Super?

How Do I Set Up An Employee With Salary Inclusive Of Super?

 

If an employment contract is established where it gives a salary that is inclusive of super, you must figure out the base salary amount and use this in Lightning Payroll, as super is always calculated separate to any wages or salary, for ATO and super fund reporting purposes.

Take the following two scenarios as an example:

(a) Kevin is a full time time employee paid $50 000 per year salary PLUS 10% ($5 000) compulsory super. A total cost of $55 000 to the employer.

Weekly = $961.54 gross per week + $96.15 super

(a) Kevin is a full time time employee paid $50 000 per year salary INCLUSIVE OF 10% ($5 000) compulsory super. A total cost of $50 000 to the employer. A gross annual salary exclusive of super needs to be entered into this employee's pay settings.

To result in $50 000 (inclusive of 10% super) it would be $45 454.55.

($50 000 / 110) * 100 = $45 454.55

Weekly = $874.13 gross per week + $87.41 super

What happens when super increases?

As explained here:

"Depending on whether an employee’s salary is expressed as inclusive or exclusive of superannuation, it may result in decrease in an employee’s take home pay, or increased costs for the employer"

Whether you can reduce the employee's salary to offset the super increase is a complex legal question, and - ethical questions aside - care must be taken as to whether this is legal action. Please see here for more information - https://employmentlawhandbook.com.au/bulletin/can-you-offset-the-cost-of-the-superannuation-increase-against-wages/

Created: 2022-06-21 09:12:08

Last Edited: 2022-06-21 09:24:42


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