Is Super Paid On Top Of Wages? What Employers Need to Know in Australia

If you employ staff in Australia, superannuation is one of those “must get right” areas that can feel simple on the surface, but gets tricky fast in real life.

A lot of the confusion comes down to one question: is super paid on top of wages, or can it be included within the amount you offer an employee?

Getting this wrong can lead to underpayments, ATO issues, unhappy employees, and a lot of time spent untangling payroll. The good news is: once you understand the rules and set your contracts and pay practices up properly, it becomes much easier to manage.

Below, we break down how “super on top” works, what “inclusive of super” really means, and the practical steps you can take to keep your business compliant.

What Does “Super Paid On Top Of Wages” Actually Mean?

When people ask whether super is paid on top of wages, they’re usually asking whether:

• the wage/salary is paid to the employee plus superannuation contributions paid separately to their super fund (super “on top”), or
• the wage figure already includes super (super “inclusive”).

Super paid on top of wages means the employee’s take-home pay (their ordinary earnings) is one amount, and then you contribute superannuation in addition to that amount.

For example, if an employee is paid $80,000 per year plus super, you pay:

• $80,000 salary (subject to tax withholding), and
• super on top at the applicable Superannuation Guarantee (SG) rate (paid to their super fund).

In contrast, if you offer $80,000 inclusive of super, the $80,000 is the total package, and the super contribution is calculated as part of that package (meaning the base salary component is lower).

From an employer perspective, the key is not whether one approach is “better”, but whether your offer, contract, and payroll setup match what you actually intend to pay.

Is Super Always Paid On Top, Or Can It Be “Inclusive”?

Super isn’t automatically “on top” in every situation. In Australia, it’s common to see pay expressed in two ways:

• Base salary/wage plus super (super on top), or
• Total remuneration package (TRP) / total package inclusive of super (super included in the stated total).

Both can be lawful, but the wording matters. If you’re not crystal clear, you can accidentally create a situation where an employee reasonably expects super to be paid on top, even if you meant a total package.

As a general rule: if you want super to be included, your employment documentation and communications should say so clearly (for example, “inclusive of superannuation”). If you don’t clearly say it’s inclusive, many employees will assume the salary you quoted is their base salary and super is extra.

This is one of the reasons it’s worth having a properly drafted Employment Contract that matches your pay arrangements (and your award/enterprise agreement obligations, if applicable).

Why The “Inclusive vs On Top” Distinction Matters

The distinction isn’t just semantics. It affects:

• how much you need to contribute to super (and whether you’re at risk of underpaying),
• how you calculate payroll and budgeting,
• what your employee believes they were offered, and
• your exposure if there’s a dispute, audit, or complaint.

If you operate a small business, this kind of misalignment can cause major headaches because it often spreads across payslips, timesheets, and multiple pay periods before anyone notices.

How To Tell If Your Pay Offer Is “Plus Super” Or “Inclusive Of Super”

In practice, the answer to whether super is paid on top of wages usually comes down to what you said (and wrote) when you made the offer, and how you structured the employment contract.

Here are common indicators.

Signs Your Offer Is “Plus Super” (Super On Top)

• Your job ad or offer letter states something like “$X per year + super”.
• The employment contract describes the salary as “base salary” and separately references superannuation contributions.
• Your payroll system treats the salary/wage as the ordinary earnings, then calculates super as an additional employer cost.

Signs Your Offer Is “Inclusive Of Super”

• Your job ad or offer states “total package” or “inclusive of super”.
• The employment contract clearly states the remuneration is inclusive of SG contributions.
• You have a salary breakdown showing the base component and the super component within the total package.

If you’re unsure, it’s worth reviewing the wording in your documentation and how it aligns with your payroll setup. Small drafting differences can make a big difference later.

Also remember: where an employee is covered by an award or enterprise agreement, you still need to ensure you’re meeting minimum pay rates and entitlements. A “total package” approach doesn’t let you contract out of minimum standards.

What Employers Need To Know About Super, Ordinary Time Earnings, And “Wages”

Another reason employers get stuck on the question of whether super is paid on top of wages is because “wages” can mean different things depending on context (employment law, payroll, tax, and super law).

From a superannuation perspective, SG contributions are generally calculated on an employee’s ordinary time earnings (OTE). OTE commonly covers earnings for ordinary hours of work and may include some allowances or loadings, but whether a particular payment counts as OTE can depend on the nature of the payment and the employee’s arrangements.

Because super is tied to OTE (not necessarily every dollar you pay), you should be careful with:

• bonuses and commissions,
• allowances,
• overtime,
• leave payments, and
• termination-related payments.

If you use incentives or variable pay, it’s worth checking (for example, with your accountant or the ATO guidance) whether those amounts are treated as OTE for super purposes.

For many small businesses, this is also where having clear pay documentation helps. For example, if you pay commission, you might use a separate commission document (or clause) alongside your employment contract, such as an Employee Commission Agreement.

What About “Payment In Lieu Of Notice”?

Final pay can raise super questions too. If you pay an employee out their notice period, it’s important to understand what that payment represents under their contract and applicable workplace instruments, and to confirm how it should be treated for super in your specific circumstances.

This is a common area of confusion for employers, especially when termination happens quickly and payroll is trying to finalise everything. If you’re dealing with this scenario, the concept of Payment In Lieu Of Notice is worth understanding so you can structure the exit correctly.

Super treatment can be nuanced and depends on the type of payment and why it’s being made, so it’s wise to get advice (for example, from your accountant or the ATO) if you’re uncertain.

Common Mistakes When Deciding Whether Super Is “On Top”

Most super issues we see aren’t caused by businesses trying to do the wrong thing. They’re usually caused by unclear wording, inconsistent payroll processes, or a well-meaning assumption that doesn’t hold up when tested.

1) Quoting A Salary Without Saying “Plus Super” Or “Inclusive Of Super”

If the number is given without context, people may interpret it differently. Employees often assume super is extra unless told otherwise, particularly when they’ve previously worked in roles where super was always paid on top.

For employers, the fix is simple: always specify whether the figure is base + super, or inclusive.

2) Using “Total Package” Language Without Doing The Maths

It’s common to advertise a total remuneration package, but then run payroll as if the salary is the base and super is extra.

This can create budget blowouts for you (if you unintentionally pay super on top) or underpayments (if you intended super on top but treated it as inclusive).

3) Not Aligning Your Employment Contract With Payroll

Your contract might say “inclusive of super”, but if your payroll system is calculating super on top of a higher base, you may end up paying more than intended.

On the other hand, if your contract implies “plus super” but payroll is treating the pay as inclusive, you may face backpay obligations.

4) Forgetting About Award Compliance And Minimum Rates

Even if you agree on a total package arrangement, you still need to ensure the base pay component meets minimum award wages (where an award applies), plus any applicable loadings and penalty rates.

In other words, a “package” can’t legally undercut minimum entitlements.

If you roster staff and pay penalties, you may also want to ensure your employment arrangements and payroll processes work together properly (especially if your staff are casual or work variable hours). It’s often helpful to have tailored contracts and workplace policies in place, including a solid Casual Employment Contract where relevant.

Practical Steps To Get Super Right In Your Business

If you want to avoid disputes and keep your payroll clean, here are practical steps you can implement.

1) Decide Your Pay Strategy (And Document It)

Choose whether you want to offer:

• base pay + super (common for many small businesses), or
• total remuneration packages inclusive of super (more common for certain professional roles).

Neither is automatically right or wrong. What matters is clarity and compliance.

2) Use Clear Wording In Offers And Contracts

Make sure your offer letter, employment contract, and any onboarding documents are consistent.

A contract is also a good place to set expectations about other key items like duties, confidentiality, termination notice, and policies. Depending on your business, you may also need separate documents (for example, if staff have access to sensitive business information, a Non-Disclosure Agreement can help protect confidential information).

3) Check Your Payroll Settings

This is where small businesses can trip up. Even if your contract is drafted properly, payroll software settings can override your intentions.

It’s worth checking:

• whether the salary figure entered is the base salary or the total package,
• how super is being calculated (and on what components), and
• whether pay items like allowances are being treated correctly for super.

4) Make Sure Your Team Communicates Consistently

If you have a manager hiring staff or negotiating pay, make sure they understand how your business presents remuneration.

A common issue is when the business owner intends “inclusive”, but the hiring manager verbally says something that sounds like “plus super”. Written clarity helps, but consistent communication is just as important.

5) Keep Good Records

If there’s ever a dispute, you’ll want to be able to show:

• the offer wording,
• the signed employment contract,
• payslips and payroll records, and
• super payment confirmations.

Clear records are part of good compliance, but they also protect your business if a misunderstanding arises later.

Key Takeaways

• Is super paid on top of wages? It can be, but it depends on whether you’ve offered “plus super” (super on top) or a “total package” (inclusive of super).
• Super “on top” means you pay the wage/salary to the employee and superannuation as an additional employer contribution to their super fund.
• Super can be included in a total remuneration package, but only if your offer and contract clearly say it’s inclusive of super.
• Unclear wording and misaligned payroll settings are common reasons businesses accidentally underpay or overpay.
• Award minimums still matter, even if you use total package arrangements.
• Having a properly drafted Employment Contract (and related documents where needed) helps you align expectations, reduce disputes, and stay compliant.

Note: This article is general information only and isn’t legal, tax, or financial advice. Superannuation obligations can be complex and depend on your circumstances, so you may wish to check the ATO guidance and/or speak with your accountant for advice tailored to your business.

If you’d like help setting up your employment contracts and pay arrangements so your remuneration and super terms are clearly documented from day one, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.