Super and bonuses - a recipe for disaster

Bonuses are a long-standing and largely effective method of encouraging higher levels of performance from the employees of your business.

Given bonuses are usually set on an economic basis, e.g. if we can secure (a) level of performance then we can afford to pay (b) to the employee, it is imperative that there are no hidden variables to the bonus amount payable.

Bonuses come in many shapes and sizes, but overwhelmingly the superannuation guarantee governed by the Superannuation Guarantee (Administration) Act 1992 (Cth) will apply to those bonuses.

Performance bonuses, ex gratia bonuses and Christmas bonuses have all been held to be connected to the ordinary time earnings of an employee and thus require the requisite superannuation guarantee payment on those amounts in addition to the amounts themselves.