Superannuation Case 2025 (No 2) [2025] NSWIRComm 1041 (4 July 2025)

Variation of Modern Awards on the Commission's Own Motion - Modern Award Superannuation Clause Review [2024] FWCFB 123

1. In this decision we determine that there should be a model award clause requiring an employer to make superannuation contributions.

1. On 17 June 2025, the President published a Statement which outlined the background to these proceedings, and set out the manner in which this Bench would determine whether the Commission ought to set a model superannuation clause:

"(1) The Full Bench will determine on the papers the following preliminary questions:

(a) as a threshold question whether there should be a model superannuation clause; and

(b) if "yes", proposed text for such a clause.

(2) Following the publication of that decision and before the Full Bench makes any orders the parties will be given the opportunity to:

(a) Comment on the text of the proposed model clause;

(b) Put submissions as to whether, pursuant to s 51(3) of the Industrial Relations Act, the proposed clause ought to apply generally to all awards or alternatively only to particular awards;

(c) If the proposed clause ought only to apply to particular awards, put submissions as to whether the remaining awards should otherwise be amended; and

(d) Put on evidence as to (b) and (c), for example to establish that a proposed clause ought not to be adopted generally or for particular awards because it would increase employee-related costs."[1]

1. This decision concerns step (1) from that Statement. We have considered the submissions filed by:

(1) Unions NSW, as the State peak council for employees and on behalf of affiliated unions;

(2) The Industrial Relations Secretary, on behalf of the Secretaries of NSW Government agencies and departments; and

(3) Local Government industrial parties jointly, constituted of Local Government NSW, NSW Local Government, Clerical, Administrative, Energy, Airline and Utilities Union, Local Government Engineers' Association, and Development and Environmental Professionals Association.

Should the Commission set a model superannuation clause?

1. Superannuation is understood to be a national employment entitlement which applies to all employees. However, the obligation on an employer created by the Superannuation Guarantee (Administration) Act 1992 (Cth) and the Superannuation Guarantee Charge Act 1992 (Cth) is to pay a tax in the form of a "superannuation guarantee charge" (SGC) to the Australian Taxation Office (ATO) unless the employer makes superannuation contributions at a certain rate on behalf of their employees. That is because the legislation was enacted under the taxation power,[2] being legislation created before the High Court confirmed that federal Parliament can legislate directly in respect of setting terms and conditions of employment in New South Wales v Commonwealth (WorkChoices Case).[3]
2. As such, a failure to pay superannuation is a matter that is addressed by the ATO. The obligation is not able to be enforced by an employee or their union. At a federal level, this was addressed by the insertion of s 149B into the Fair Work Act 2009 (Cth),[4] which provides that all federal awards must include a term requiring the employer to make superannuation contributions to avoid liability to pay the SGC, creating an award obligation that can be enforced.
3. This led to clauses being inserted into federal awards. For example, clause 35 of the Manufacturing and Associated Industries and Occupations Award 2010 at the time of 20 June 2013 provided:

35. Superannuation

35.1 Superannuation legislation

(a) Superannuation legislation, including the Superannuation Guarantee (Administration) Act 1992 (Cth), the Superannuation Guarantee Charge Act 1992 (Cth), the Superannuation Industry (Supervision) Act 1993 (Cth) and the Superannuation (Resolution of Complaints) Act 1993 (Cth), deals with the superannuation rights and obligations of employers and employees. Under superannuation legislation individual employees generally have the opportunity to choose their own superannuation fund. If an employee does not choose a superannuation fund, any superannuation fund nominated in the award covering the employee applies.

(b) The rights and obligations in these clauses supplement those in superannuation legislation.

An employer must make such superannuation contributions to a superannuation fund for the benefit of an employee as will avoid the employer being required to pay the superannuation guarantee charge under superannuation legislation with respect to that employee.

(a) Subject to the governing rules of the relevant superannuation fund, an employee may, in writing, authorise their employer to pay on behalf of the employee a specified amount from the post - taxation wages of the employee into the same superannuation fund as the employer makes the superannuation contributions provided for in clause 35.2.

(b) An employee may adjust the amount the employee has authorised their employer to pay from the wages of the employee from the first of the month following the giving of three months' written notice to their employer.

(c) The employer must pay the amount authorised under clauses 35.3(a) or (b) no later than 28 days after the end of the month in which the deduction authorised under clauses 35.3(a) or (b) was made.

Unless, to comply with superannuation legislation, the employer is required to make the superannuation contributions provided for in clause 35.2 to another superannuation fund that is chosen by the employee, the employer must make the superannuation contributions provided for in clause 35.2 and pay the amount authorised under clauses 35.3(a) or (b) to one of the following superannuation funds or its successor:

(a) AustralianSuper; or

(b) Labour Union Cooperative Retirement Fund (LUCRF); or

(c) TasPlan; or

(d) SunSuper; or

(e) CareSuper; or

(f) Cbus; or

(g) FIRSTSUPER; or

(h) Allied Union Superannuation Trust of Queensland (Aust(Q)); or

(i) Westscheme; or

(j) MTAA Superannuation Fund; or

(k) any superannuation fund to which the employer was making superannuation contributions for the benefit of its employees before 12 September 2008, provided the superannuation fund is an eligible choice fund.

Subject to the governing rules of the relevant superannuation fund, the employer must also make the superannuation contributions provided for in clause 35.2 and pay the amount authorised under clauses 35.3(a) or (b):

(a) Paid leave

For the period of absence from work (subject to a maximum of 52 weeks in total) of the employee due to work related injury or work related illness provided that:

• the employee is receiving workers compensation payments or is receiving regular payments directly from the employer in accordance with statutory requirements; and

• the employee remains employed by the employer.

1. The Fair Work Act was subsequently amended on 30 June 2023 to include a statutory right to superannuation within the National Employment Standards at Division 10A of Part 2-2, coming into effect on 1 January 2024:[5]

116B Employer's obligation to make superannuation contributions

An employer must make contributions to a superannuation fund for the benefit of an employee so as to avoid liability to pay superannuation guarantee charge under the Superannuation Guarantee Charge Act 1992 in relation to the employee.

116C Reduction of employer's liability to the extent of superannuation charge payments

The obligation to make contributions for an employee under section 116B does not apply to an employer to the extent that:

(a) the employer has made a charge payment (within the meaning of section 63A of the Superannuation Guarantee (Administration) Act 1992) in respect of the employee under Part 8 of that Act; and

(b) the employee is a benefiting employee (within the meaning of that Part); and

(c) the Commissioner of Taxation is required to pay, or otherwise deal with, a shortfall component (within the meaning of that Part) for the benefit of the employee under that Part.

1. Those Fair Work Act provisions do not apply to employees who are covered by NSW State Awards and are employed by the State of NSW or Local Government entities. Employees covered by State awards do not have an equivalent entitlement to commence proceedings before a court to obtain superannuation contributions associated with an underpayment.
2. We decide there should be a standard clause providing such an entitlement. As Unions NSW submitted, employees should be able to enforce the underpayment of their superannuation as a breach of their award. More fundamentally, award terms exist to provide enforceable fair and reasonable conditions of employment.
3. The Secretary contended that the insertion of a standard clause would be unnecessary, because NSW public sector employers have historically made superannuation contributions to avoid paying the SGC. It asserted that employees and unions had not raised any concerns relating to the payment of superannuation contributions, including during award negotiations.
4. We accept that the various State Government departments and agencies are unlikely to fail to pay superannuation that they accept is payable. However, there will be instances where the question of whether an employee is entitled to a particular payment which is superable is in issue, and the employee ought to be able to claim superannuation as part of their overall claim. In other words, there should be an entitlement, as there is at a federal level, that can be enforced at the same time as any underpayment claim. That entitlement, unlike that which rests on superannuation legislation, ought to be directly enforceable by an employee or their union.

What is the appropriate wording for the clause?

1. Unions NSW proposed that the clause should be modelled off the model clauses in "Background Paper 3 - Award Superannuation Clauses by Category" ("Background Paper 3"), as amended by the Full Bench of the Fair Work Commission in Variation of Modern Awards on the Commission's Own Motion - Modern Award Superannuation Clause Review.[6] In its primary submissions it proposed the following wording:

Clause X - Superannuation

X.1 Superannuation Legislation

(a) Superannuation legislation deals with the superannuation rights and obligations of employers and employees and includes:

(i) the Superannuation Guarantee (Administration) Act 1992 (Cth);

(ii) the Superannuation Guarantee Charge Act 1992 (Cth);

(iii) the Superannuation Industry (Supervision) Act 1993 (Cth);

(iv) the Superannuation (Resolution of Complaints) Act 1993 (Cth);

(v) the Police Regulation (Superannuation) Act 1906 (NSW);

(vi) the Superannuation Act 1916 (NSW);

(vii) the State Authorities Superannuation Act 1987 (NSW);

(viii) the State Authorities Non-contributory Superannuation Act 1987 (NSW); and

(ix) the Aware Super Act 1992 (NSW).

(b) The rights and obligations in this clause supplement those in superannuation legislation.

X.2 Employer contributions

(a) An employer must make such superannuation contributions to a superannuation fund for the benefit of an employee as will avoid the employer being required to pay the superannuation guarantee charge under superannuation legislation with respect to that employee.

(b) If the employee is a member of a superannuation scheme established under superannuation legislation referred to in X.1(a)(v)-(ix), the employer must comply with the obligations under that legislation.

(c) For clarity, a failure to comply with the obligations under superannuation legislation is a breach of this clause.

X.3 Absence from work

Subject to the governing rules of the relevant superannuation fund, the employer must also make the superannuation contributions provided for in clause X.2:

(a) Paid leave - while the employee is on any paid leave.

(b) Work-related injury or illness - For the period of absence from work of the employee due to work-related injury or work-related illness provided that:

(i) the employee is receiving workers compensation payments or is receiving regular payments directly from the employer in accordance with statutory requirements or is receiving other insurance benefits; and

(ii) the employee remains employed by the employer.

1. The Secretary also contended that, should the Full Bench decide that public sector awards should include a standard clause, it could be modelled off the federal award clause from "Background Paper 3", albeit with different modifications.
2. Both parties agreed that the clause did not need to include subclauses relating either to the nomination of a superannuation fund, nor, at least in State awards which already enable employees to make voluntary contributions, a right to make voluntary post-tax contributions. They also agreed that the list of legislation in proposed subclause X.1 should not include the Superannuation (Resolution of Complaints) Act 1993 (Cth), which has been repealed.
3. No similar provision to proposed subclause X.2(b) exists in federal awards. In its further reply submissions, Unions NSW justified its inclusion on the basis that it did not impose on employers any additional obligations over and above those contained in the statutes in question. However, we agree with the Secretary's submission that the obligations imposed by the superannuation clause should be no wider than necessary to ensure that employees and their unions can enforce an obligation to make superannuation contributions. Superannuation legislation imposes a wide range of additional obligations on employers that are not necessary to replicate. That said, we consider that it is appropriate to refer to the existence of relevant State legislation in subclause X.1 to provide guidance as to the existence of relevant legislation, provided the rest of the clause is clear that the employer's obligations are limited to that which arise under the Commonwealth legislation.
4. It was the Secretary's submission that the clause should, in order to clarify the consequences to an employer once the SGC becomes payable, include a subclause equivalent to s 116C of the Fair Work Act 2009 (Cth), quoted above at [7]. Section 116C makes clear that an employer's obligation to make superannuation contributions for an employee does not apply to the extent that an employer pays the SGC, having not made a superannuation contribution, and the Commissioner of Taxation pays a shortfall component of the SGC for the benefit of the employee.
5. Unions NSW, in in its reply submissions, submitted that the insertion of such a subclause would be superfluous, as in the event that an employer pays the SGC to the Australian Tax Office and the shortfall is paid out to the employee, that employer would have already complied with Commonwealth superannuation legislation and therefore Unions NSW's proposed subclause X.2. We also note that such a clause will rarely, perhaps never, apply to a public sector employer. We are nonetheless content to follow the approach of the Fair Work Act to make pellucid that an employer is not liable to make superannuation contributions for an employee if they have paid the SGC, even if we acknowledge that such a subclause is unlikely to have much work to do in practice in respect of employees covered by awards made by the Commission.
6. At the directions hearing, Unions NSW indicated it was not seeking to press subclause X.3 at this time. That was appropriate given that the conditions in subclause X.3 are not standard conditions at a federal level, being a feature of only some federal awards. As subclause X.3 is not a standard national condition of employment it is not obvious it should apply to all State government employees. It is open to Unions NSW to seek to extend the model clause in the manner proposed by subclause X.3 either generally or in respect of particular awards, but that should be done on its own motion.

1. At Annexure A of this decision is our proposed wording for a model superannuation clause for public sector awards in NSW.
2. As foreshadowed in the earlier Statement in Superannuation Case 2025,[7] the parties have until 18 July 2025 to file submissions and evidence that address two issues. The first is the drafting of the proposed wording. Any such submissions should assist the Commission to identify any unintended consequences and inappropriate language arising from the proposed wording, not to reagitate arguments that have already been made. Second, the parties should address the method by which the model clause should be applied. In that regard the parties should consider whether it ought to be a standard entitlement applicable to every employee by the making of an order under s 51(3) of the Industrial Relations Act 1996 (NSW) applying to every award or perhaps every award other than certain identified awards, or whether it ought to be a model clause to be inserted into awards on application or at the Commission's own initiative on an award by award basis, including as part of a review of awards pursuant to s 19 of the Industrial Relations Act.

(1) Parties are by 18 July 2025 to put on submissions and evidence as to:

(a) the terms of the draft clause which is at Annexure A to this decision;

(b) whether, pursuant to s 51(3) of the Industrial Relations Act, that clause ought to apply to all awards or only some; and

(c) whether there are any awards which should not be varied in terms of the model clause, and if so whether and how they should be otherwise amended.

(a) Superannuation legislation deals with the superannuation rights and obligations of employers and employees and includes:

(i) the Superannuation Guarantee (Administration) Act 1992 (Cth);

(ii) the Superannuation Guarantee Charge Act 1992 (Cth);

(iii) the Superannuation Industry (Supervision) Act 1993 (Cth);

(iv) the Police Regulation (Superannuation) Act 1906 (NSW);

(v) the Superannuation Act 1916 (NSW);

(vi) the State Authorities Superannuation Act 1987 (NSW);

(vii) the State Authorities Non-contributory Superannuation Act 1987 (NSW); and

(viii) the Aware Super Act 1992 (NSW).

(b) The rights and obligations in this clause supplement those in superannuation legislation.

(a) An employer must make such superannuation contributions to a superannuation fund for the benefit of an employee as will avoid the employer being required to pay the superannuation guarantee charge under Commonwealth superannuation legislation with respect to that employee.

(b) For clarity, a failure to comply with the obligations under Commonwealth superannuation legislation is a breach of this clause.

(c) In this clause, a reference to "Commonwealth superannuation legislation" is a reference to Superannuation Guarantee (Administration) Act 1992 (Cth), Superannuation Guarantee Charge Act 1992 (Cth), and Superannuation Industry (Supervision) Act 1993 (Cth).

The obligation to make contributions for an employee under this award does not apply to an employer to the extent that:

(a) the employer has made a charge payment (within the meaning of section 63A of the Superannuation Guarantee (Administration) Act 1992 (Cth)) in respect of the employee under Part 8 of that Act; and

(b) the employee is a benefiting employee (within the meaning of that Part); and

(c) the Commissioner of Taxation is required to pay, or otherwise deal with, a shortfall component (within the meaning of that Part) for the benefit of the employee under that Part.

[1] Superannuation Case 2025 [2025] NSWIRComm 16 at [7].

[2] Roy Morgan Research Pty Ltd v Federal Commissioner of Taxation (2011) 244 CLR 97; [2011] HCA 35.

[3] (2006) 229 CLR 1; [2006] HCA 52.

[4] Fair Work Amendment Act 2012 (Cth), Sch 1, item 13.

[5] Fair Work Legislation Amendment (Protecting Worker Entitlements) Act 2023 (Cth), Sch 3, Pt 1.

[6] [2024] FWCFB 123.

[7] [2025] NSWIRComm 16.