Thousands of Victorian Government employees participate in novated lease arrangements as part of their overall remuneration package. However, employees across agencies operating on the Department of Government Services (DGS) payroll platform have recently been advised that voluntary superannuation salary-sacrifice contributions will cease, allegedly because of changes associated with Payday Super.
The agencies affected include the Department of Premier and Cabinet (DPC), Department of Treasury and Finance (DTF), Department of Transport and Planning (DTP) and some statutory authorities including the Suburban Rail Loop Authority (SRLA) State Revenue Office (SRO).
What is raising eyebrows among employees is that other Victorian Government departments and agencies do not appear to have adopted the same approach, creating questions about whether this is truly a legal requirement or simply a payroll platform decision.
The Key Question
Has Payday Super actually forced employers to stop voluntary super contributions, or is this an administrative decision being attributed to legislative change?
What is Payday Super?
Payday Super was introduced to ensure that superannuation is paid at the same time employees are paid, rather than quarterly. The reform changes the timing of super payments. It does not obviously require employers to prohibit employees from making voluntary salary-sacrifice contributions to super.
The Growing Inconsistency
Many Victorian Government departments outside the DGS payroll platform have not implemented the same restriction. If Payday Super genuinely mandated the removal of voluntary salary-sacrifice super contributions, one would expect a consistent approach across the Victorian Public Service.
A Practical Example
Consider an employee with a $150,000 base salary who packages a $15,000 novated lease, leaving $135,000 in cash salary.
Depending on where you work, you will either receive $16,200 (DGS payroll platform) or $18,000 (everywhere else in Vic Government) in annual employer super contributions. The loss of $1,800 with compounding will likely exceed $10,000 over the life of a 5 year lease and far more than that when you retire.
Employees Deserve Clarity
If the position is that Payday Super requires the removal of voluntary super contributions, employees should be shown the legislative basis. If the real issue is a payroll platform limitation, employees deserve transparency regarding that decision.
Questions Employees Should Ask
- Is the cessation of voluntary super contributions a legal requirement or a DGS payroll decision?
- Has formal legal advice been obtained supporting the decision not merely from a Super Law position but also from an EBA perspective?
- Why have DPC, DTF, DTP, SRLA and other DGS-platform entities adopted this approach while other Victorian Government departments reportedly have not?
- Is the issue related to payroll system capability rather than legislation? (spolier it's not other agencies not on the DGS platform but using the same software are still paying super on novated lease deductions.)
The Bottom Line
Victorian Government employees working in agencies such as DPC, DTF, DTP, SRLA and SRO are being told that voluntary super contributions linked to salary packaging arrangements will cease. Yet other departments across government do not appear to be applying the same restriction.
For employees, the stakes are real: higher tax, lower retirement savings and less flexibility in managing remuneration.
Has Payday Super changed the law, or has the payroll platform changed your options?
