(Cth) Reclassify Superannuation Guarantee Contributions as an Employment Entitlement
- Maggie Jia, Jacinda Dixon-Rielly, Mieke Crighton & Zoe Kromar
- 3 days ago
- 7 min read
Author: Maggie Jia, Jacinda Dixon-Rielly, Mieke Crighton & Zoe Kromar | Publish date: 12/4/2026
P: Employees are not guaranteed unpaid superannuation contributions in the event that their employer becomes insolvent.
S: The Minister for Employment and Workplace Relations should amend Part 1(5) of the Fair Entitlements Guarantee Act 2012 (Cth) to include superannuation contributions as an ‘employment entitlement’ that can be paid as an advance to an eligible employee in the case of insolvency.
Problem Identification:
Part 1(5) of the Fair Entitlements Guarantee Act 2012 (Cth) (FEG Act) outlines ‘employment entitlements’ such as ‘annual leave … [and] wages’. However, superannuation is not included under employment entitlements.
According to the Employment Rights Legal Service (ERLS), this means that when ‘a business has been placed in liquidation,’ employees will receive their superannuation ‘only if there are funds available … which is a remote chance in most circumstances’. The Economics References Committee (ERC) stated that this places a ‘problematic’ reliance on the ATO for recovery. The Association of Superannuation Funds of Australia (ASFA) noted that this results in compounding financial loss, and what the ERLS described as a misalignment in national standards.
Context:
Superannuation refers to the portion of an employee's wage (a minimum 12%) that employers are legally obliged to contribute to a dedicated fund, which is invested to provide financial support upon retirement.
According to Prosper Law, the ‘National System Employer (NSE) is an employer covered and bound by’ the National Employment Standards (NES). NES refers to ‘the minimum employment entitlements that have to be provided to all employees.’
The Australian Securities & Investments Commission defines insolvency as ‘when a company or person can't pay debts when they are due’, which often leads to bankruptcy and personal insolvency agreements. According to the Australian National Audit Office, in cases of insolvency, ‘entitlements are advanced to an eligible employee under the FEG [Fair Entitlements Guarantee] Scheme’. They further stated ‘the Australian Government … becomes a subrogated creditor of the relevant insolvent entity with standing to recover the FEG amount through the insolvency process.’
Arguments:
ASFA highlighted that ‘unpaid superannuation contributions due to employer insolvency [may cause] many Australian employees [to] have a substantial shortfall in their superannuation savings’. The Super Members Council stated that ‘unpaid super also compounds losses over time,’ with losses of $1,730 a year potentially making people 'up to $30,000 poorer at retirement.’ Former ASFA CEO, Dr Martin Fahy, emphasised that because ‘money that should be going into super’ is not being invested, ‘individual retirement outcomes [are] being lost.’
The ERC commented that ‘the ATO's heavy reliance on [employees] to trigger compliance activities is problematic, as it places the onus on affected employees to take action. This in turn presents challenges to the … likelihood of [superannuation] being recovered.’ The Compensation Scheme of Last Resort described the process to retrieve unpaid super as ‘stressful, lengthy, time-consuming and sometimes expensive’, therefore making the ‘impact this has on the consumers … significant’. Even after reporting unpaid super, Professor Anderson from the University of Melbourne Law School reported, ‘employees cannot force the ATO to take action on their behalf.’ Furthermore, in a personal testimony reported by the ABC, Nicholas French described being ‘short-changed’ after resigning. He outlined the recovery process as like getting ‘blood from a stone’, stating that ‘by the time [he] got onto the ATO to recover that money, the company had gone into liquidation and it couldn't be recovered’.
According to the Shop, Distributive and Allied Employees’ Association (SDA), the exclusion of superannuation from the FEG Act is unwarranted and creates a misalignment within Australian employment standards. They highlighted that ‘superannuation is an industrial entitlement, akin to wages, leave, notice and redundancy payments’. Despite this, as the SDA noted, ‘the definition of “employee entitlements” in the FEG Act does not include superannuation guarantee contributions’. Industry Super Australia stated that ‘superannuation is part of an employee’s wages’ and ‘it is not a conceptually distinct entitlement that warrants separation from recovery of other workplace pecuniary entitlements.’
Advice/Solution Identification:
The ERLS, ASFA, SDA, Construction and Building Unions Superannuation Fund, and AustralianSuper have all called for superannuation contributions to be included as an ‘employment entitlement’. The SDA stated that this could help align with current worker entitlements and protect workers’ future financial stability. They further noted that this solution is necessary, ‘given the increasing reliance on superannuation to secure Australian[s’] retirement incomes’.
Precedent:
There is international precedent for reclassifying Superannuation Guarantee Contributions as an employment entitlement. In Ireland, the Insolvency Payment Scheme protects unpaid pension contributions when employers become insolvent.
Public Support:
This list reflects publicly stated positions and should not necessarily be taken as endorsement of this specific brief.
News Coverage:
The Guardian - “Employers shortchanged Australian workers a record amount of super last year, tax office says”. The article reported the multi-billion dollar superannuation gap and the growing legislative push to classify superannuation as a protected workplace entitlement. By: Paul Karp | 6 November 2024 - Read the article here.
ABC News - “One in four workers missing out on being paid their superannuation for retirement”. The article revealed that Australian workers are losing billions in retirement savings due to systemic unpaid superannuation, prompting urgent calls for legislative reforms to improve employer compliance and payment frequency. By: Nassim Khadem | 28 August 2024 - Read the article here.
LSJ Online - “Despite new laws empowering ATO, many Australians are owed super by employers”. The article outlined that despite legislative updates to the Superannuation Guarantee, many Australian workers continue to face significant retirement savings shortfalls due to persistent employer non-compliance and the administrative complexities of the recovery process. By: Cat Woods | 7 February 2024 - Read the article here.
ABC News - “Australian workers lose more than $4.7 billion a year in unpaid super — and the ATO rarely penalises employers”. This article highlighted the significant financial vulnerability of young workers and underscored the push for ‘payday super’ reforms to ensure more frequent, transparent retirement contributions. By: Daniel Ziffer and Adelaide Miller | 30 June 2025 - Read the article here.
Where to go to learn more:
(2025) Submission to the Fair Entitlements Guarantee (FEG) Inquiry | Employment Rights Legal Service (ERLS) - This submission, as detailed in the Redfern Legal Centre’s March 2025 inquiry, argued for amendments to current Australian insolvency protections, including superannuation as an employment entitlement. Read the submission here.
(2025) Addressing Corporate Misuse of the Fair Entitlements Guarantee | SDA National - This submission to the Department of Employment and Workplace Relations’ consultation on Addressing Corporate Misuse of the Fair Entitlements Guarantee (FEG) outlined the history, issues and recommendations for superannuation in Australia, including a recommendation to include superannuation as an employment entitlement. Read the submission here.
(2025) Unpaid Super Slashing Retirement Savings of Young Aussies and Tradies, ASFA Warns | ASFA - This media release outlined the statistics on unpaid superannuation and the effect that it has on young workers, as well as ASFA’s support for the recent Payday Super reforms. Read the media release here.
(2026) Payday Superannuation Announcements | ATO - This web page outlined the recent government-announced changes to the superannuation guarantee from July 1 2026. Access the webpage here.
Fair Entitlements Guarantee Act 2012 (Cth) - Read the Act here.
Human Perspective:
Maria worked for a small retail business for more than 8 years before the company entered liquidation. When it collapsed, she lost her job with little warning and soon discovered that, unlike her unpaid wages and leave, her unpaid superannuation contributions were not covered. Her employer had failed to pay a significant portion of the superannuation they were legally required to contribute. Maria could report the unpaid contributions to the ATO, but the process required her to calculate what she was owed and lodge a claim herself, with no guarantee the funds would ever be recovered. For Maria, the missing contributions meant a reduced retirement balance; thousands of dollars lost today could translate into tens of thousands less at retirement. She felt anxious about her financial future, frustrated that years of work had left her without the retirement security she had earned.
To protect the anonymity of those involved, this is a fictionalised account drawn from an amalgamation of real-life stories, experiences and testimonials gathered during the research process for this brief. Any resemblance to actual individuals is purely coincidental.
Conflict of interest/acknowledgment statement:
N/A
Support
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Disclaimers
Please review all FORE disclaimers here.
Reference list:
Anderson, H. (2017). Detecting unpaid superannuation. ARITA Journal, 29(2), 34–35. https://law.unimelb.edu.au/__data/assets/pdf_file/0008/2584286/Anderson-H-Detecting-Unpaid-Superannuation-2017-292-ARITA-Journal-34-5.pdf
Association of Superannuation Funds of Australia. (2017, March 22). Unpaid super – workers deserve better [Media release]. https://www.superannuation.asn.au/media-release/media-release-22-march-2017/
Association of Superannuation Funds of Australia. (2025). Submission to Department of Employment and Workplace Relations: Addressing corporate misuse of the Fair Entitlements Guarantee [Submission]. https://www.superannuation.asn.au/wp-content/uploads/2025/03/250331-Submission-to-DEWR-Addressing-corporate-misuse-of-the-FEG.pdf
Australian National Audit Office. (2018). Achieving value for money from the Fair Entitlements Guarantee Recovery Program. https://www.anao.gov.au/work/assurance-review/achieving-value-money-fair-entitlements-guarantee-recovery-program
Australian Securities and Investments Commission. (n.d.). Regulatory resources: Insolvency. Australian Government. https://www.asic.gov.au/regulatory-resources/insolvency/
AustralianSuper. (2025). Addressing corporate misuse of the Fair Entitlements Guarantee [Submission]. https://www.australiansuper.com/-/media/australian-super/files/about-us/policy-submissions/2025/addressing-corporate-misuse-of-the-fair-entitlements-guarantee-april-2025.pdf
Australian Taxation Office. (2023, August 2). What is super. Australian Government. https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/what-is-super
Australian Taxation Office. (2025, October 9). Unpaid super from your employer. Australian Government. https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/growing-and-keeping-track-of-your-super/unpaid-super-from-your-employer
Department of Employment and Workplace Relations. (2023). Superannuation in the National Employment Standards [Fact sheet]. Australian Government. https://www.dewr.gov.au/download/15203/superannuation-national-employment-standards/33688/superannuation-national-employment-standards/pdf
Employment Rights Legal Service. (2025). Addressing corporate misuse of the Fair Entitlements Guarantee [Submission]. https://rlc.org.au/sites/default/files/2025-06/250331%20ERLS%20Submission%20on%20FEG%20Inquiry.pdf
Fair Entitlements Guarantee Act 2012 (Cth). https://www.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/fega2012278/s5.html
Fair Work Ombudsman. (n.d.). National Employment Standards. Australian Government. https://www.fairwork.gov.au/employment-conditions/national-employment-standards
Industry Super Australia. (2017). Warning signs: Tightening the belt on sharp corporate practices: Treasury and Department of Employment Inquiry into the Corporate Misuse of the Fair Entitlements Guarantee Scheme [Submission]. https://treasury.gov.au/sites/default/files/2019-03/Industry-Super.pdf
National Foundation for Australian Women. (2017). Submission to Senate Economics References Committee Inquiry into the impact of non-payment of the Superannuation Guarantee. https://share.google/hg9EWja7KmnVyVWR4
Senate Economics References Committee. (2017, March 3). Superannuation Guarantee non-payment [Public hearing transcript]. Parliament of Australia. https://www.aph.gov.au/Parliamentary_Business/Hansard/Hansard_Display?bid=committees/commsen/7d0a2278-b621-4869-b588-d1591c19bb07/&sid=0006
Senate Economics References Committee. (2017). Superbad: Wage theft and non-compliance of the Superannuation Guarantee. Parliament of Australia. https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/SuperannuationGuarantee/Report
Shop, Distributive and Allied Employees' Association. (2025). Addressing corporate misuse of the Fair Entitlements Guarantee [Submission]. https://www.sda.au/wp-content/uploads/2025/03/SDA-Submission-on-Addressing-Corporate-Misuse-of-the-Fair-Entitlements-Guarantee.pdf
Solo, A. (2025, June 29). What is a national system employer in Australia? Essential business guide. Sprintlaw. https://sprintlaw.com.au/articles/what-is-a-national-system-employer-in-australia-essential-business-guide/
Super Members Council. (2025, October 9). Payday super laws a long time coming: Let’s get it done [Media release]. https://smcaustralia.com/media/payday-super-laws-a-long-time-coming-lets-get-it-done/
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