Employees Temporarily Working in Australia Who Are Covered by a Bilateral Super Agreement
Employees Temporarily Working in Australia Who Are Covered by a Bilateral Super Agreement
If you`re a foreign employee, or an employer with temporary foreign workers, it`s important to understand the superannuation requirements in Australia. Fortunately, the Australian government has established Bilateral Social Security Agreements with several other countries, including the United States, Japan, and Germany, to help ensure that temporary workers receive the same benefits as their Australian counterparts.
What is superannuation?
Superannuation, or “super,” is a retirement savings plan mandated by the Australian government. Both employers and employees contribute a percentage of the employee`s salary (currently 9.5%) to a super fund, where it accrues interest and grows over time. Once an employee reaches a certain age or retires, they can withdraw their super as a lump sum or receive ongoing payments.
Who is covered by a bilateral super agreement?
A bilateral super agreement allows temporary foreign workers in Australia to continue making super contributions in their home country, rather than having to also contribute to an Australian fund. These employees are exempt from the superannuation requirement as long as they can provide proof of their home country`s agreement with Australia.
However, it`s important to note that not all foreign employees are covered by these agreements. For example, employees on a working holiday visa are not covered and must make super contributions to an Australian fund. Similarly, employees on a 457 visa who have been sponsored by an Australian company for over six months must also contribute to an Australian fund.
What are the benefits of a bilateral super agreement?
For employers, a bilateral super agreement can simplify the process of hiring temporary foreign workers by removing the need to set up and manage an Australian super fund. This can save time and reduce administrative costs.
For employees, a bilateral super agreement ensures they receive the same retirement benefits as Australian workers, and can also help them avoid paying duplicate super contributions. As super is a percentage of an employee`s salary, contributing to both a home-country and an Australian fund would result in a higher overall contribution rate.
It`s important for both employers and employees to understand the superannuation requirements in Australia, especially for temporary foreign workers. Bilateral Social Security Agreements can offer a helpful solution, but it`s crucial to ensure that all parties involved are eligible and compliant with the relevant regulations.