Full Federal Court clarifies Super on annualised salaries

The Full Bench of the Federal Court overturned last year's finding by Justice Flick that Bluescope Steel should have made superannuation contributions for additional hours and public holidays worked by employees on annualised and aggregate salaries at its Port Kembla Steelworks.

Chief Justice Allsop said an analysis should be done around the proper construction of 'ordinary hours' as defined by the Superannuation Guarantee (Administration) Act 1992 (SGA Act). The statutory meaning of "ordinary hours of work" is standard hours at ordinary rates, as distinct from additional hours at higher rates.

"That distinction is found as the framework for the construction of the annualised and aggregate salaries in the industrial instruments," he said.

"The additional hours, as the overtime, are required in the arrangement, and the employees are paid therefore at a higher rate than the base salary…The same applies to public holidays.”

"The superannuation legislation requires a focus (if the distinction is made in the instruments as it is here) upon the standard or ordinary hours at ordinary rates as the basis for the operation of s23 [of the SGA Act]."

Chief Justice Allsop said the fact that this interpretation was less favourable to some employees than calculating superannuation on the whole annualised salary "is a consequence of the proper construction of the superannuation legislation". He said further that "… legislation is not intended to give superannuation benefits for the total salary"….

"It was and is a system to encourage national savings for retirement based on standard hours at ordinary rates.”

However, employers should note that "Greater superannuation than this minimum amount encouraged by the superannuation guarantee levy can be bargained for," the Chief Justice said.

Employers should carefully consider the terms of the relevant employment contract or Enterprise Agreement, specifically in relation to superannuation obligations.

[Bluescope Steel (AIS) Pty Ltd v Australian Workers Union 92019) FCAFC 84]

Disclaimer: This summary is not legal advice and for more information on wages call NECA Legal (WA) Pty Ltd on (08) 6241 6129 or email necalegalwa@ecawa.org.au.