Workers expecting a big jump in their superannuation payments could get a shock on July 1.
Some employers are looking for ways to avoid passing on legislated super rises to their workers.
Workers have employment contracts that either state their super should be paid on top of their base salary, or that is included as part of their total package.
It's employees in the second category who face taking home less wages.
Employment lawyers say if an employee's contract says their super is included in their total package, it might be legal for their boss to take that money out of their base pay.
"Provided the employees don't drop below the minimum permitted wages in an award enterprise agreement, or the minimum wage, then yes, it is permitted," says Hall & Wilcox partner Fay Calderone.
She has been getting many queries from employers asking for advice on whether they have to pass on the increase.
She says large employers are generally not the ones who deny workers super rises. The big four consultancies — PwC, Deloitte, EY, and KPMG — have already publicly stated that their workers will have their total pay package increased by 0.5 per cent.
But Ms Calderone says other employers may not pass the increase on, and there's a history of them acting this way.
"The businesses in the middle — where they are large enough where they've had their contracts prepared — they've had the history behind them where this has happened before," she says.
Australia Institute's chief economist Richard Denniss has also heard historical reports of it happening, but says it's likely to be even worse this time around.
"There have been instances of this in the past, but I fear it's becoming more prevalent for the simple reason that more and more employees are on the kind of contracts that allow it to happen," Mr Denniss says.
"Unfortunately, I think a bunch of smaller and medium sized businesses are feeling that they're going to get away with it. That no one's going to notice. And even if someone notices, no-one's really going to care.
"But let's be clear, if thousands of employers do this, that's exactly why we don't get wage growth in Australia."
Super rise may depend on your employment contract
The super guarantee is the proportion of wages that employers must contribute to their workers' retirement savings.
It's legislated to increase from 9.5 per cent to 10 per cent from July 1, and then rise 0.5 per cent each year, until it reaches 12 per cent by 2025.
Research firm Mercer recently surveyed 145 organisations. For organisations using a "base plus" remuneration model, 62 per cent said they are maintaining their employees' take-home pay, with the employer meeting the full cost of the increase in employer super contributions.
In contrast, almost two-thirds of organisations with a "total package" approach – where their super is bundled in with their salary — are passing on at least some of the cost to employees.
Unions are outraged, saying that for most employers, the cost of delivering the point-five per cent increase is less than $5 a week.
"It is absolutely shocking to me that employers would be trying at this point to try and avoid paying that small increase in superannuation," says ACTU President Michele O'Neil.
"This [the super rise] is something that is going to mean that for …the economy, and for our social security and pension system, we'll be better off if people have enough money to retire on and retire without living in poverty."
Pay rises unlikely anytime soon
Wages have been stagnating for a long time, but the pandemic means the outlook for pay rises is even more dire.
Public and some private sector worker wages have already been frozen.
Workers simply aren't getting pay rises, and Treasury and Reserve Bank data suggests wages growth won't be seen anytime soon.
While employers may legally not have to pass on the super rises, the unions argue it's not within the spirit of the law to deny workers what was effectively supposed to replace a wage rise.
Ms O'Neil says her message to employers is to remember that workers have been worst-hit by the pandemic.
"They [workers] paid the price of losing hours losing jobs, and losing pay," she says.
"Now's the time, we should be supporting people making sure that they have fair wage increases, and that they have that confidence of knowing they're going to have enough to retire on when they come to that point in their life."
Ms Calderone says "it's a real conundrum at the moment" as to what employers do.
"Employers are struggling ... but we also know that many employees are living hand to mouth," she says.
"So, employers need to balance what the financial consequences are going to be from passing on the pay reduction to employees, against the potential that those employees will go elsewhere.
"You [employers] have got the turnover costs, the recruitment costs, the training costs that come with employees leaving.
"And then even if they [employees] do stay — because many employees will stay in this current environment — it's a disengagement and the impact on morale."
A trade-off between super and wages
The federal government could legislate to stop employers being able to do this, but Superannuation Minister Jane Hume says she's long been warning that there is a trade-off between super increases and higher wages.
There was pressure on the government to abandon the super guarantee increase to 10 per cent amid the pandemic, with groups like the Grattan Institute and others warning it could result in lower wages.
But Senator Hume says the government weighed this trade-off carefully against the economic data prior to the budget, when it announced it would stay the course and deliver the legislated increase.
She says the government is "committed to growing the economy, to drive down unemployment and in turn increase wages".
But Ms O'Neil says the government needs to make changes to the law to stop employers being able to take the increase from workers' base pay.
"I would also say to the federal government, that they should make changes to make sure that there is never a loophole that every worker in Australia has that right to have their superannuation go up to 10 per cent as of the first of July this year," Ms O'Neil says.
Mr Denniss says the government could make it very clear to employers what the "responsible, fair and appropriate thing to do is".
"If [the government] want to help workers, they could go out there today, and they could make it clear to employers that this is not what's expected of them," he says.
"Unfortunately, that's not the approach the government took, with some companies grabbing too much JobKeeper and refusing to give it back.
"The Reserve Bank, Treasury, virtually all economists agree that what Australia needs right now is higher wages growth, and here we have employers pocketing what's supposed to be an increase in retirement incomes for their employees."
If after July 1 employers do take the position where they deny workers super increases, Australia's economic recovery could take longer and be unequal for many.