Mandatory employee benefits in Australia include retirement or ‘superannuation,’ and PTO including holiday pay, long service leave, maternity/paternity leave, and sick pay. Supplementary employee benefits include education advancement, voluntary benefits, health insurance and flexible working arrangements.
CA Financial Services Group
Mandatory employee benefits in Australia
This is a mandatory benefit in Australia subject to legislative requirements. Employers must follow the ‘Choice of Fund’ legislation to allow an employee to select their own, preferred pension plan or auto enroll eligible employees into a complying Group Superannuation scheme.
The legislated minimum is currently 9.5% up to a maximum quarterly salary of $55,270 (i.e., contribution of $5,250.65 per quarter p.a.). Employees can then elect to salary sacrifice pre-tax dollars into the fund (up to yearly limits).
The numbers shown above are minimum requirements. Most employers base their contribution strategy on industry norms and benchmarking data, which can vary from sector to sector.
When designing your Australian superannuation scheme, great care needs to be taken in three areas:
- Contributions — how do they benchmark in your sector?
- Supplier — selecting the best supplier based on service and costs is important. This will largely depend on member numbers.
- Insurance included — default employer plans have a basic minimum of life and disability lump sum cover, but larger employers typically look towards higher levels of cover. This provides the benefit of scale such as auto cover and cheaper premiums.
Paid Time Off
- Holiday Pay – All full- and part-time employees are legally entitled to 20 paid holidays per year. This does not apply to casual employees however who are more typically paid by the hour or on flexible work contracts. This is in addition to the public holidays. It is now more and more common for employers to allow staff to ‘buy’ or ‘salary sacrifice’ extra days.
- Long Service Leave – Reasonable and unique to Australia, there is a legislated 8.67 weeks of paid leave in addition to the annual leave payable on the completion of 10 years’ service. This entitlement starts to accrue from five years and many businesses will have this registered as a ‘liability’ in their balance sheet.
- Maternity / Paternity Pay – Although there are no legislated paid parental leave requirements for the employer, today companies offer paid parental leave. There is, however, a government parental leave payment (for those eligible), which can be paid through the employer. Full rules can be found at: gov.au
- Sick Pay – There are no official Statutory Sick Pay benefits — however, most employers voluntarily offer between five and ten days per year. This is sometimes inclusive or exclusive of the typical bereavement leave (commonly up to five days).
Supplementary employee benefits in Australia
- Group Insurances – Very popular for large, multi-national companies in a number of sectors to build a personal insurance plan for staff that will often include Salary Continuance cover as well as lump sum Death and Disability insurance
- Health insurance – This has traditionally been a lower priority but with the Government increasing taxes and reducing rebates for high income earners over the past 5+ years, this is seeing a rise in large business offering fully paid or subsidies plans (although mostly in IT and professional sectors where salary levels are high and competition for talent)
- Education Advancement/Programs – These are very popular and common.
- Company cars – Small numbers of employees are provided with company financed cars and/or fuel, or a car allowance. Salary packaging through a ‘Novated Lease’ is reasonably common amongst professional services, IT, or industries where salary levels are typically higher.
- Childcare centers and subsidiaries – An increasing number of large, professional services companies are looking to offer childcare placements and or daycare facilities.
- Flexible working arrangements – For families including higher levels of time off, working times and working from home arrangements.
- Voluntary Benefits – Larger employers often provide employees with a range of ‘voluntary benefits’ which are often provided at discounted prices through the employer or a third-party benefits provider. Personal insurances are the most common.
- Flexible Benefits – It is increasingly popular to provide flexible benefits where employees select benefits from a menu. CA Financial Services can help build and manage the right mix of benefits to offer your employees depending on demographics, age, and location.
- Gymnasiums – Very large employers at times provide ‘gym on site’ facilities whereas smaller employers may offer gym subsidies or access to a gym with lower corporate rates.
- Workplace Canteens – Canteens are common with larger employers who have high time expectations from their employees or are in remote locations.
- General Wellness — This is becoming front and center of most employer discussions and is a sub-set of
- the flexibility discussion. This is seeing a rise in more communal spaces with break-out activities like table tennis or pool tables, bubble chairs, swings, and even swivel scooters. On the more serious side, advertisements on where to seek help or access information for mental health are becoming more common.
- Flu Shots and vaccinations – Done onsite and occasionally with other basic health checks.
- On-site canteens and/or healthy food choices – Traditionally just vending machines or a small fridge, but more recently they can include fresh fruit delivery services, juice and smoothie bars, or menu selections from a local supplier to onsite restaurants.
- Subsidies for Health and Fitness facilities – Usually some connection or partial subsidy for a gym, but it is expanding to a wider variety of health services such as yoga, Pilates, and swim center.
- In-house bathrooms and shower facilities – Gaining attention as more staff look to walk, ride, or run to work or for those who want to get some activity done during work hours (now more supported than in past years).
- Increased relaxation activities – Includes onsite team games, lifestyle classes, and even massages.
- Group benefit pools – More and more employers are signing up to a supplier of discounted goods and services where the scale of many employers can produce significant discounts on shopping, petrol, movie tickets, travel, and leisure activities.