An Australian Taxation Office (ATO) ruling has identified a serious superannuation short-coming in a scheme established in the building and construction industry to handle the long service leave of workers moving from project to project and who therefore work for a variety of employers.
An ATO interpretative decision has ruled that employers are not obliged to make superannuation guarantee contributions on long service leave payments unless an actual employer/employee relationship exists.
The decision, handed down in late January, relates to employment in the building and construction industry, particularly those people covered by the so-called “worker entitlement fund”, which enables workers employed by a variety of employers to accrue long service leave entitlements.
The ATO said that in the circumstances of the case, the individuals receiving the long service leave payment from the worker entitlement fund had no contractual relationship with the fund.
“The role of the fund is to provide a particular service for the employees working within the building and construction industry, which is the collection and disbursement of long service leave entitlements,” the ATO ruling said. “The individuals are not performing any work or providing services or labour to the fund.”
It said that none of the indicators that are relevant in determining whether an individual is a common law employee are present.
“Accordingly, the fund will not have an obligation under the Act to make superannuation contributions on long service leave payments made by the fund to the individuals,” the ATO ruling said.
