How Superannuation Works for Foreign Employers Hiring in Australia

If there's one thing that catches overseas businesses off guard when they hire their first Australian employee, it's superannuation. Not because it's impossibly complicated, but because it works completely differently to retirement schemes in most other countries and the assumptions people bring with them are almost always wrong.

The most common one I hear? "The salary we agreed on includes super, right?"

It doesn't. And that misunderstanding can cost you more than you'd expect.

Here's what you actually need to know.

What is superannuation?

Superannuation, or "super", is Australia's compulsory retirement savings system. As an employer, you are legally required to contribute a percentage of each eligible employee's earnings into a superannuation fund on their behalf. It's not deducted from the employee's pay. It's an additional cost on top of their salary that the employer carries.

Think of it less like a pension deduction and more like a mandatory employer contribution that sits completely outside the salary agreed on.

The number everyone gets wrong

This is the single most common mistake we see from overseas clients, and it catches people out more often than you'd think.

When an Australian employee says their salary is $100,000, they almost always mean $100,000 plus super on top. Not $100,000 inclusive of super. And here's the part that trips people up even further: even if a salary is described as "gross salary", that still does not include super in Australia. Gross salary and super are two separate things. Always.

The two are very different numbers. At the current rate of 12%, a $100,000 salary means the total employment cost is actually $112,000 before anything else is factored in. If the budget is set at $100,000 all-in and super turns out to be additional, that's a 12% gap nobody was expecting.

At Employer of Record Australia we see this assumption come up constantly, particularly from businesses in the US, UK and Europe where employer pension contributions tend to work differently. Always clarify whether a quoted salary is plus super or inclusive of it. In Australia, whether the figure is described as a salary or as gross salary, super is always on top.

What's the current rate?

The superannuation guarantee rate is currently 12% of an employee's ordinary time earnings. This rate came into effect on 1 July 2025 and is the final scheduled increase after years of incremental rises. It is not legislated to increase further beyond 12% under current law, so businesses can plan with that figure confidently for now.

The 12% applies to ordinary time earnings, not total remuneration. Overtime, for example, is generally excluded from the super calculation. For most salaried professional roles this distinction doesn't change things much, but it's worth understanding for roles with variable pay components.

Where does the money go?

Every employee has the right to choose their own superannuation fund. At Employer of Record Australia, we handle the entire setup process at onboarding, including checking whether a new employee has an existing stapled super fund linked to them from previous employment via the ATO. If they do, contributions go there. If they don't, we set them up with a default compliant fund.

We also handle all super payments on behalf of our clients on a payday basis, meaning contributions go in with every pay run rather than sitting in a quarterly holding pattern. Employees see their super contributions regularly, everything is transparent, and there are no quarterly deadlines to track or miss.

What happens if super isn't paid correctly?

The ATO takes unpaid or underpaid super seriously. Missing payments, paying late, or calculating on the wrong basis triggers the Super Guarantee Charge, which is non-deductible, meaning it costs more than simply paying correctly in the first place. The ATO has significantly increased enforcement activity in this area in recent years, and underpayment of super has become both a financial and a reputational issue for employers.

For businesses managing Australian payroll from overseas, staying across super obligations while also running a business in another country is exactly the kind of compliance risk that quietly compounds. At Employer of Record Australia, super is calculated correctly, paid on time with every pay run, and reconciled as part of our standard service. Our clients don't carry that risk because we do.

TL;DR

Superannuation is 12% of an employee's ordinary time earnings, paid on top of their salary. Gross salary in Australia does not include super. It is always additional. Get the salary conversation right from the start by confirming whether figures are quoted plus super or inclusive of it — in Australia the answer is almost always plus.

At Employer of Record Australia, superannuation is handled end to end as part of our service. Correct calculations, payday contributions, stapled fund checks at onboarding and full compliance included.

If you'd like to talk through what that looks like for your business specifically, reach out!

Jasmin Robertson is Operations Director at Employer of Record Australia, a Brisbane-based EOR, sponsorship and recruitment business helping global companies hire in Australia.