You have 0 free articles left this month.
Register for a free account to access unlimited free content.
accountants daily logo

Federal Court judgment spotlights compliance quirk for accountants


The Federal Court’s recent decision on superannuation contributions under the super guarantee scheme could see some well-intentioned accountants caught out down the track, says one tax consultant.

By Jotham Lian 10 minute read

Last month, the Federal Court held that in Australian Workers' Union v BlueScope Steel (AIS) Pty Ltd [2018] FCA 80, the employer should have made superannuation contributions in respect to “additional hours” and “public holidays” components of salaries payable to the employees.

Under the terms of the agreement between BlueScope Steel and its employees, employees were required to work additional hours as well as work on public holidays.

“It is the very fact that the Bulk Operations Enterprise Agreement 2005 (for example) requires employees to work “additional hours” and on “public holidays” as the norm that underpins the recognition that those employees can only fairly be remunerated by reference to an ‘annualised salary’,” said Federal Court judge, Justice Geoffrey Flick.

“Given the manner in which work is performed, and required to be performed, there is no real or practical distinction between (for example) the standard or ordinary hours of work separate from the total number of hours worked, including “additional hours”.

“Nor is there any real distinction between work on public holidays and work on any other day.”

Thomson Reuters tax consultant, Terry Hayes, said the ruling would “get a few employers thinking” because it deemed that such additional hours of work were ordinary time earnings despite the Enterprise Agreement between the company and its employees.

“The Court said hours which are worked beyond standard or fixed hours may become such that they become the "ordinary hours" of an employee,” said Mr Hayes.

“This meant that the employer was required to take super out for those employees. I would imagine that a lot of employers would not have expected that.”

Tax barrister John Morgan said that from a super guarantee charge perspective, it does construe the ‘ordinary times earnings’ term out of the Section 6 of the Superannuation Guarantee (Administration) Act.

"The Commissioner of Taxation, however, was not a party to this case and could not be bound by it, for the purposes of enforcing the SGC law," said Mr Morgan.

"In this respect, it is worth noting that 'ordinary time earnings' is only relevant for measuring the percentage compliance and not the amount of the tax, if the relevant contribution is not made.

"For instance, if the full 9.5 per cent of 'ordinary time earnings' contributions is made, then there is a full 9.5 per cent reduction in the charge. The charge, however is based on the amount of ‘salary and wages’ for income tax purposes."

Superannuation guarantee obligations has been on the tax office’s radar, with recent draft legislation proposing criminal penalties for employers and directors who don’t comply with a direction to pay outstanding superannuation guarantee. If passed, the new laws will be effective from 1 July this year.

This email address is being protected from spambots. You need JavaScript enabled to view it.

Jotham Lian

Jotham Lian


Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.

Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.

You can email Jotham at: This email address is being protected from spambots. You need JavaScript enabled to view it. 

You are not authorised to post comments.

Comments will undergo moderation before they get published.

accountants daily logo Newsletter

Receive breaking news directly to your inbox each day.