Long-term hospitality workers victims of unpaid superannuation

 In Home News Section, Uncategorized

When Annie Stephenson consolidated her superannuation in March 2020 she was shocked.

After working various hospitality jobs for a decade, she had less than $1,200 in superannuation.

“Friends my age who have been working for the same amount of time as me have between $20,000 and $70,000 in super,” she said.

“Long-term hospo people were the only people with really low balances less than $2,000.”

It caused a huge amount of financial and emotional distress for the 28-year-old when the pandemic hit last year.

She lost her job, found out she wasn’t eligible for JobKeeper, and then discovered she had almost no superannuation to withdraw as part of the COVID-19 early release scheme.

“I just didn’t have any savings, I hadn’t planned for a pandemic to happen – our super, that was our safety net,” she said.

“I ended up going to hospital. I’d been having these seizures, and this is after losing my job.”

Ms Stephenson is also worried about what it means for her long-term financial security.

“To see that nobody has invested in your future, it is just so obvious that they don’t care about you, they don’t respect you. It’s pretty devastating,” she said.

Kerry Levier left the hospitality industry after seeing friends, family and colleagues impacted by the non-payment of superannuation.

“As women, we already live in poverty and we are far more impacted by the superannuation underpayment,” she said.

“My message is when you enter work we have an agreement: my job was to run a business, take people’s money and bank it, [the employer’s] job was to pay a small wage including superannuation, by law.”

Does hospitality have a particular problem?

Unpaid superannuation in hospitality is not a new problem.

The ABC reported on the issue in 2018 when chef Pamela said after 20 years working as a chef she had less than $3,000 in superannuation.

On Monday, co-owners of iconic Melbourne Music venues the Tote and Bar Open admitted they had not paid their staff superannuation for almost two years.

“It is far too easy to drift out of payment terms because of cash flow pressures and far harder to correct it when it happens,” Jon Perring and Sam Crupi told the ABC in a statement.

“I’m sure if all employee entitlements, including super, were collected and managed by the ATO and not by business, like PAYG is, these problems would not predominate throughout the Australian economy.”

The owners say there are “undoubtedly” systemic problems with superannuation underpayment in small businesses and, after extended lockdowns in Victoria and New South Wales, the issues will only be exacerbated.

“We would speculate that super compliance in hospitality businesses is likely to be in a minority of the industry,” they said.

The union for hospitality workers agrees there are systemic problems.

Hospo Voice director Karma Lord says the industry is “ground zero” for super theft, and the problem is “supercharged” by insecure work.

“About 40 per cent of the hospo workers we surveyed last year said they’ve had super stolen,” she said.

“We think the real number is probably quite a bit higher because it can take quite some time before a worker discovers an employer has been stealing their super.”

While retirement income may not be front of mind for young workers, Ms Lord says unpaid superannuation early in life can condemn workers to poverty in their later years.

“The way compound interest works, super contributions made early in a worker’s career generates a lot more interest than those made later in your career,” she said.

“So missing out on those early deposits will cost young workers big time — it’s likely the real figure they have had stolen down the track is tens of thousands of dollars.”

CEO of the Restaurant and Catering Industry Association Wes Lambert is unsure whether hospitality has a bigger problem with unpaid superannuation than other industries.

“There is no excuse for not paying entitlements including super,” he said.

The association advocates for educating business owners about their legal requirements, over punishing them for breaking the law.

Millions of Australians missing super

Last year, more than 28,000 businesses reported themselves to the Australian Taxation Office (ATO) as part of a Superannuation Guarantee (SG) Amnesty, which gave employers an opportunity to pay historically unpaid super without additional administration charges or penalties.

Around $911.5 million dollars in unpaid superannuation from between July 1, 1992 and March, 31 2018 was disclosed.

“More than 90 per cent of the employers who engaged with the SG amnesty have now paid or entered into a payment plan,” an ATO spokesperson said.

“This has enabled over $796.1m to be paid to super funds, with a further $62.3m subject to payment plans benefiting more than 692,200 Australian employees.”

These back payments could be the tip of the iceberg.

Analysis of ATO data from 2016–2017 by Industry Super Australia found 2.85 million Australians were being short-changed on their super by a total of nearly $6 billion dollars.

What happens when employers don’t pay super?

Employers who owe super are required to lodge a Superannuation Guarantee Charge statement and pay the outstanding amount including interest and a mandatory administration fee.

Bosses who do not comply can face penalties of up to 200 per cent of what they originally owed.

As of July 1 in Victoria, new wage theft laws make it a criminal offence to dishonestly withhold superannuation, wages or other employee entitlements.

Employers found guilty of wage theft can now face fines of up to $218,000 or even a 10-year jail sentence.

“These laws don’t impose any new requirements on businesses,” Commissioner of the Wage Inspectorate Victoria Robert Hortle said.

“What they do is hold dishonest employers to account and protect vulnerable employees from exploitation.”

Hospo Voice hopes the threat of jail will help “stamp out” super theft.

“Workers also need a cheap, quick and easy process for winning back stolen super,” Karma Lord said.

“There has been money budgeted for a new court process by the Victorian government and we look forward to it becoming a reality.”

Where to report if you think you haven’t been paid

If employees suspect they are not being paid their full superannuation entitlement they can go to the ATO website.

If you are in Victoria, in addition to reporting to the ATO you can also contact the Wage Inspectorate Victoria online if you think your employer has deliberately withheld entitlements since July 1, 2021.

The tax commissioner says they aim to act on all reports within 21 days.

By Matilda Marozzi (Original ABC Article)