The Australian Taxation Office (ATO) says it will ramp up the use of its powers against employers who fail to pay workers their superannuation after being on "delay" with enforcement action against businesses during the COVID-19 pandemic.
Emma Rosenzweig, the deputy commissioner of superannuation, told a parliamentary hearing into the unlawful underpayment of superannuation that the ATO can make a direction to employers to pay workers.
Its powers allow the agency to hit employers with hefty penalties and take action that could result in jail time if they don't pay workers their superannuation entitlements.
But she said that the ATO had held back forcefully using these powers because of the impact the COVID-19 pandemic was having on businesses.
"We've obviously still been working with businesses through the impacts of the pandemic," Ms Rosenzweig told the hearing on Tuesday.
"We've talked about the fact that we have not aggressively pursued debt collection. And we've been trying to work to support businesses, to sustain them through the pandemic."
"I guess we've sort of had a bit of a delay before we really think it's appropriate to start pulling them out as one of the tools in our kit."
About 3 million Australians unpaid up to $5 billion in super each year
Industry Super Australia data shows that almost 3 million Australian employees missed out on $5 billion in employer super contributions in 2018–2019.
That means unpaid super affects more than a quarter of employees, costing each affected worker an average of $1,700 per year.
Previous ATO figures shared with ABC News show that last financial year the agency hit employers with $240 million in penalties for not paying their workers' superannuation, but during that period they did not use their powers to direct jail time.
Asked if the ATO has a zero-tolerance approach for employers not paying workers their super, she said: "We've always said it's entirely unacceptable."
The ATO, she said, was getting better at using real-time data "to be more proactive with employers" that are underpaying or not paying their workers' super.
"We have to work across that spectrum … but we take it very seriously. We investigate absolutely every single person that comes to us to tell us that they have been underpaid super, or they think they've been underpaid super."
Even when workers win in court, they may never be paid their super
Earlier in the hearing, the United Workers Union gave testimony that several workers it recently represented in a court case against childcare centre operator ECEC Management have not complied with the court's orders.
"To date, our members have not received any of the outstanding superannuation owed to them," the United Workers' Union submission said.
ABC News previously spoke to Margaret Joyce was one of several employees who chased down their super through the union.
In June 2021, the Federal Circuit Court of Australia declared that her employer, ECEC Management, had breached the Fair Work Act by failing to pay superannuation and providing misleading payslips to workers.
It handed down orders that the company must pay the workers involved more than $82,000 (including interest).
Then, in September, the court ordered ECEC Management to pay $60,000 in penalties.
However, Ms Joyce and several other workers in the case are still waiting for their money. Ms Joyce is owed about $6,000 in super.
United Workers Union industrial officer Melinda Bolton said the union took the case to court because the ATO could not act for workers when the company was liquidated.
"It wasn't clear to us what action the ATO was actually taking if they were taking any action at all," Ms Bolton said.
She said it was "a great frustration" that the amounts owed are "technically not owed directly to the members".
"They're owed to the superannuation funds being held in trust, which means that [even] as we've got court orders stating that the employer needs to needs to pay the outstanding superannuation, when they don't make those payments, we have very few enforcement possibilities for those court orders because we're not the super funds."
In response to that testimony, Ms Rosenzweig said the ATO would be looking into "whether there is more we can do to actually inform employees about the nature of the payment plan".
But she said it was important that workers regularly monitor their super payments are going into their funds on time and at the right amounts.
Call to pay superannuation in sync with wages
Industry Super Australia (ISA) in its submission said that it was hard for employees to track their super because they were not paid in sync with wages.
ISA wants the federal government to change the law so that payment is in sync with fortnightly wages payments.
Its submission said third-party notifications to the ATO still make up the significant proportion of unpaid super investigations by the ATO.
"There is a lack of transparency around how the ATO uses single touch payroll to match against other ATO data to identify where and when underpayments are occurring," it said.
"These processes should be automated yet it appears they are not."
"Outdated laws permit super to be paid just quarterly – with up to four months elapsing between a super entitlement accruing and its eventual payment.
"More frequent payment of super would allow the ATO to act quicker, make it easier for employees to track their payments, and harder for employers to fall behind. It would improve cashflow practices and even the playing field for business."
ISA also noted that the ATO has pointed out some businesses use their employees' super entitlements to fund other liabilities and obligations at the expense of the employee – "this is clearly not what super is there for".
"Super is the members' earned wages," ISA said.
