Category Archives for "Payroll"

Secure Jobs and Better Pay Bill - How will it affect your business?

The Secure Jobs and Better Pay Bill 2022 was passed in November 2022 as an amendment to the Fair Work Act 2009.

Some changes start immediately, and others will roll out over the next six months to a year.

The act amends workplace relations laws relating to many aspects of employment. While not every new law will affect every employer, it's essential to understand the extensive changes that are coming.

The Main Changes

• Flexibility of working hours, enabling workers to negotiate hours that suit them.
• Collective enterprise bargaining allows employers within the same industries to negotiate common pay and conditions agreements.
• Changes to the enterprise bargaining system to make it easier for employees to initiate bargaining for an enterprise agreement where existing enterprise agreements have expired.
• Fixed term contract limitations will constrain the number of times a contract can be renewed. This should result in employers offering permanent positions to workers once the contracts have ended.
• Pay secrecy clauses in employment agreements must be removed, meaning an employer cannot force an employee to keep from discussing their pay with colleagues.
• The right to protection from sexual harassment means employers must be proactive in fostering an environment free from sexual harassment.
• Changes to the better off overall test (BOOT) should make assessing whether a proposed agreement passes the test simpler.
  Equal remuneration principles to promote gender pay equality.

What Next?

The Bill has brought significant reforms to employee entitlements that make it more important than ever to ensure your employment agreements comply with the new laws.

There will be more updates next year about the changes, but in the meantime, we recommend you prepare for the new laws that will affect your business.

Employees and the Holiday Season – What You Need to Know

The summer holiday period can be confusing to employers and employees alike – public holidays worked or taken as annual leave, business shutdowns, annual leave provisions… there are many rules employers need to understand.

Employees are entitled to annual leave and public holidays under the National Employment Standards minimum entitlements.

Employers can ask employees to work on public holidays within reason. For example, if the business is open every day of the year, and the employment agreement states that public holidays may be required, the employer can reasonably ask an employee to work a public holiday.

An employee can refuse to work on a public holiday if the request is unreasonable or there are reasonable personal grounds for refusing.

Christmas and New Year Public Holidays 2022-23

This year the following public holidays apply to employers in all states:

• Sunday 25 December 2022 Christmas Day
• Monday 26 December 2022 Boxing Day
• Tuesday 27 December 2022 Additional public holiday for Christmas Day
• Sunday 1 January 2023 New Year’s Day
• Monday 2 January 2023 Additional public holiday for New Year’s Day

Public holidays are paid at ordinary rates for employees who take the day off. Employees who work on a public holiday must either be paid penalty rates according to the relevant award or be given an extra day off in lieu of the public holiday. Some awards have specific provisions or additional benefits for public holidays, so it's important to check.

If an employee has booked annual leave for the Christmas and New Year periods, the public holidays are not counted as annual leave. For example, if a permanent employee is on annual leave from Monday 26 December to Friday 6 January, they will use eight days of annual leave, not ten. Two of the days are paid as public holidays.

Some other key points to remember:

• Public holidays are counted as service, so annual and personal leave continues to accrue as usual.
• Overtime worked on a public holiday may be paid at a different rate than regular overtime – check the relevant award or agreement.
• Check the award or agreement for shutdown provisions. Most awards have guidance for directing employees to take leave during annual shutdowns.
• If employees don’t have enough annual leave, employers can agree to pay them in advance for leave not yet accrued, or the employee can take unpaid leave.

The FWO has further advice on rules and entitlements during the end-of-year holiday season.

You might also need to think about cash flow planning for the holiday period, particularly if the business shuts down but still has obligations for payroll and other expenses.

We can help plan holiday period payments so you can make the most of your summer holiday!

Digital Payroll for Your Business

Many businesses traditionally rely on paper employee records which are time-consuming to maintain. So it's no surprise that many business payroll records are lacking, as business owners don't have the time to keep them correctly.

The ATO and Fair Work Ombudsman are known to target small businesses with employees, as the industry has a track record of incomplete or inaccurate payroll records.

Additionally, many business owners have trouble staying up to date with the frequent changes in Australian payroll laws and the relevant modern awards used in the industry.

Many digital payroll solutions can help with payroll compliance and accurate record keeping. There is a range from simple, low-cost solutions to sophisticated human resource management apps. Once you are connected with a digital payroll app, staying abreast of the changing rules will be much easier.

While reliable internet can be a problem in regional areas, getting a digital payroll solution that you can use on a computer or mobile phone can dramatically reduce the administration workload of maintaining payroll.

Once systems are set up, there are many benefits to using a digital system:

• Link entitlements, conditions, pay rates and categories from an award or enterprise agreement to each employee.
• Approval process for timesheets and leave.
• Flags for exceptions, such as an employee forgetting to enter an end time for a shift or not taking a lunch break.
• Set piece rates and allowances.
• Integrated Single Touch Payroll filing with the ATO. If you use paper or spreadsheet records, you must still use a separate digital system to report STP.
• Secure and private payroll records are backed up online, protected from natural disasters.
• Detailed costing for each shift or work week so you can plan ahead for the total cost of wages, taxes and super.
• The system will automatically keep the records for the required seven years.
• Employees can access payslips and request leave via their phone.
• Superannuation calculation and payments are fully integrated into the payroll system.

If it’s time to upgrade your payroll systems, talk to us.

We'll help set you up with the right digital system for your business so you can spend less time dealing with paper and spreadsheets!

Payroll Updates Sept 2022: Minimum Wage, Super Increase and STP

Are you across the recent payroll and employment law updates?

Below is a summary of these updates. 

Remember, we can help check your payroll setup, award provisions, employee agreements, and payroll costing. We can also assess if your software is ready for ATO STP Phase 2 reporting, so feel free to get in touch. 

Minimum Wage Increased on 1 July 2022

The national minimum wage increased on 1 July by 5.2% to $21.38 per hour (or $812.60 per week).

The minimum wage increase applies to employees if an award or national minimum wage defines their pay rate.

This year, the Fair Work Ombudsman (FWO) has once again implemented minimum wage increases to awards in a staggered approach. Most awards increased on 1 July; however, some will increase on 1 October.

For full details of October award increases, visit Fair Work Ombudsman October 2022 minimum wage increase. The main industries changing in October are Aviation, Hospitality and Tourism.

Tax Table Updates

While most tax tables remain the same for the 2022-23 financial year, the annual indexing of the study and training support loans have been applied.

Check the study and training support loans and working holiday makers tax tables for current withholding rates.

If you use online payroll software, the updates will be taken care of already. But if you process payroll manually, you’ll need to factor in the new rates for these tax types.

Superannuation Increase from 1 July 2022

The superannuation guarantee statutory rate increased to 10.5% on 1 July. Your payroll software should automatically update the rate, but check that the rate has updated, just in case you have manually entered the rate for some employees or payroll categories.

Review any agreements or annualised salary arrangements you have with employees that may be inclusive of superannuation.

Also, remember that the monthly $450 threshold has been removed, meaning that you must pay superannuation for all earnings. If you have a large casual workforce, this could impact your costs significantly.

Your first quarterly superannuation payment at the new rate will be due in October 2022.

Unpaid Pandemic Leave Reinstated for Some

During the COVID-19 pandemic, Schedule X was added to most awards to allow for two weeks of unpaid pandemic leave. The schedule expired in June 2022 but has been reinstated for some awards:

• Aged Care
• Ambulance and patient Transport
• Aboriginal and Torres Strait Islander Health Services
• Health Professionals and Support Services
• Supported Employment Services
• Social, Community, Home Care and Disability Services

Employees who no longer have unpaid pandemic leave available in their awards can take personal leave if unwell or use annual leave if they need to isolate themselves but are otherwise well enough to work. They can also use carer's leave if they need to look after unwell family members.

Review Your Payroll

Now is an excellent time to assess your payroll systems in readiness for the busy summer season ahead.

Talk to us. We can help check your payroll setup, award provisions, employee agreements and payroll costing. 

There are many details to take care of when engaging workers, and we can also advise on the software you are using and make sure it meets the ATO’s Single Touch Payroll reporting requirements. Note: STP reporting requirements are due for all employers by 31 December unless you use Xero, in which case the date has been extended to 31 March 2023.

Changes to Annualised Salaries in Restaurant and Hospitality Awards

Annualised salary arrangements in restaurant and hospitality awards are changing in September 2022.

After a review of the annualised arrangements in these awards, the Fair Work Commission has introduced changes that will make payments for salaried workers fairer.

Employers have been able to pay 25% on top of the base wage to allow for overtime and penalties. This meant they could do an annual reconciliation of actual hours worked to ensure the salary covered the overtime and penalties there were entitled to had they been paid by the hour. Any shortfall in wages could be paid with a single top-up payment each year.

New arrangements

The new arrangements bring in weekly outer limits to overtime and penalty hours. Employees who work more than 18 hours on weekends and public holidays within a week will need to be paid the hourly or penalty rate in addition to the regular wage.

If you’re paying staff an annual salary, the new rules mean you will need to review hours each week to check staff are not working more than the prescribed outer limits for extra hours. If they are, you will need to calculate the amount owing and pay it each week.

While an annual reconciliation of hours worked against the wages paid is still required, you can no longer wait until the end of the year to calculate and pay any shortfall.

The new system should make it fairer for salaried employees who will receive payment in the week that extra hours over the limits were worked. It should also assist with your business’s cash flow, as you'll be paying wages during busy times, and the annual top-up payment should be smaller.

Review Your Annualised Salary Agreements

If you’re paying staff a salary, there are certain obligations you have to meet.

We can help get systems in place to manage your employer obligations and make it as easy as possible to track time and perform the annual reconciliations of hours against wages paid.

Book a time to talk to us about the new provisions for restaurant and hospitality workers and how to implement them in your business.

The differences between a contractor and an employee

The terms "contractor" and “employee” can be a bit tricky to understand, but it's important for businesses of all sizes. When you're not sure if someone is really an independent contractor or employee-the penalties are severe!

There are a few reasons why a company might want to hire someone as a contractor instead of an employee. For example, the company might think that the person can get tax benefits, or they might want more flexibility in their workforce.

However, by law, it is determined by the nature of the employment relationship whether someone is an employee or contractor.

There are no exceptions to this rule.

This means that everyone has to abide by basic employment standards and entitlements, as well as statutory tax and superannuation requirements.

A breakdown of the differences between a contractor and an employee

There are some differences between contractors and employees. Here is a breakdown:

Employees:

People who work for a contract company are called employees. They work under an agreement or contract that says they will serve the employer.

Employees usually have to work in specific places and at specific times, and they usually work for only one company.

Employees are paid by the hour and their pay includes things like PAYG (Pay As You Go) taxes and other benefits.

They are also eligible for superannuation, which is a retirement savings account.

Employees have all the minimum rights required by law.

Contractor:

A contractor is someone who works for themselves under a contract.

This means that they are not employed by anyone else, but instead have a contract with one or more people or companies to do a specific job or set of jobs.

Contractors usually provide their own equipment and systems for doing the job, although this may not be the case in all situations.

They also take on more commercial risk than employees (although this also depends on the contract).

Contractors are not paid through payroll, but rather invoice for their work and receive payments directly from their clients. They have most workplace rights but different tax, insurance, and superannuation responsibilities.

An essential difference between an employee and a contractor

There is an essential difference between an employee and a contractor.

"An employee works for your company and is part of it. A contractor is their own boss and runs their own business."

How to identify if you are employing a contractor or an employee

The Australian Tax Office (ATO) has developed a tool to help you decide if someone working for you is an employee or contractor for tax and super purposes.

We recommend using this tool to help you understand if your worker is an employee or contractor for tax and super purposes.

Employees Leaving? Here’s What You Need to Know About Final Payments

Employees leaving your business? While some termination payments are simple, many are complex, and it's essential to get the payroll and tax correct so you don’t disadvantage employees or make costly errors.

Most small businesses in Australia employ people. One of the most common payroll errors is incorrect processing of termination payments when employees leave.

With the introduction of Single Touch Payroll Phase 2, getting payroll correct is more important than ever, as the data is reported directly to other government agencies. If the payroll detail is not accurate, it could affect employees' benefits or income tax.

Final Payments

Final payments for employees can range from very simple to highly complex. It depends on the circumstances of the termination, the industry, the modern award or registered agreement, age and other factors.

Before you pay an employee who is leaving your business, you’ll need to gather information to ensure accuracy.

• Final date worked and reason for termination – resignation, retirement, abandonment of work, dismissal, redundancy, end of contract or medical invalidity.
• Check termination provisions in the relevant award.
• Check the National Employment Standards for the minimum notice period and redundancy pay if applicable.
• If you usually pay annual leave loading, this is also paid on termination.
• Amount of leave owing, and if there are any accrued rostered days off or time in lieu.

A termination payment can be made up of several elements:

• Final ordinary hours.
• Unused annual leave, loading and long service leave.
• Redundancy payment.
• Pay in lieu of notice.
• Unused rostered days off.
• Superannuation.
• Ex gratia payment.
• Other payments made in case of death, invalidity, or compensation or as required by certain awards.

Taxation of Termination Payments

Taxation can also be complex for final payments.

Some payments are taxed at marginal rates and others at a flat rate. Special codes must be included in some termination pays to notify the ATO of payment types. For some payments, there are thresholds that must be observed that will affect the termination payment's tax rates and taxable amount.

Getting Help

The best general authorities for learning more about termination payments are the Fair Work Ombudsman and the Australian Taxation Office. For more complex payroll and termination payments, our payroll specialist can help, or we can refer you to an employment law expert if needed.

Fixing termination payroll errors can be costly and time-consuming, not to mention problematic for the employee if categories or taxes are incorrect.

Talk to us before paying employees, so you get it right the first time.

Big Changes to Superannuation

There are some big changes to super happening in the coming months.

Here are three of the key changes.

1. GIVING CASUAL & PART-TIMERS A GO

From July 1 the $450 monthly income threshold that workers currently need to earn before they’re eligible for compulsory employer super contributions will be removed.

This means a large number of casual and part-timers will now be eligible for compulsory employer super contributions.

As the part-time share of employment is over 30% in Australia, this has been widely welcomed by the super industry and is estimated to help about 300,000 people, mostly women.

2. GOING TO 10.5 PERCENT

On 1 July 2022 the super guarantee rises to 10.5 percent.

This is important to know because if you do not pay an employee's minimum superannuation guarantee amount on time and to the right fund, you must then pay the superannuation guarantee charge (SGC) and lodge an SGC statement to the ATO.

The SGC is more than the super you would have otherwise paid to the employee's fund and is not tax deductible.

3. FLEXIBILITY FOR SENIORS

Other recent legislation passed removes the work test for super contributions for 67-75 year-olds.

Previously people aged 67 to 74 were prevented from contributing to super unless they were employed.

The new legislation means 67-74 year-olds no are no longer required to meet the 40-hour work test, provided their contributions are made via salary sacrifice contributions.

It’s important to note that people aged between 67 and 75 who wish to make personal deductible contributions to super will still be required to meet the 40-hour work test.

Another law change lowers the age threshold for the super downsizer scheme from 65 to 60.

Downsizer contributions are made to super funds from the proceeds of selling your home. The reduction in the age threshold provides greater flexibility for older Australians to contribute to their super.

There is a nil cashing condition applied to downsizer contributions, which means funds must be preserved within the super account until conditions of release are met. For more information about downsizing, visit ato.gov.au.

Let us help you get it right and sort out the tax and superannuation obligations for your team.

Do Your Independent Contractor Agreements Measure Up?

Contractor Agreements - As a business owner, it's vital that you classify workers correctly to minimise the risk of being penalised later for wrongly classifying contractors when they should be classified as employees.

It’s a common area of concern for business owners who engage contractors. Many Fair Work Ombudsman cases have resulted in severe penalties and back payments imposed for engaging someone as a contractor when they should have been paid as an employee.

What’s Required in Contractor Agreements?

You should have a comprehensive agreement with every independent contractor.

The contract should include:

• Details of the nature of the working relationship to demonstrate that a genuine contractor relationship exists.
• All rights and obligations of both the contractor and the business.
• Terms and conditions of the agreement.
• Whether superannuation applies.
• The main factors used to assess the worker as a contractor such as independence, ability to delegate work, the basis of payment, the use of tools and equipment, the degree of control or the ability to take on other work.
• The date of the next review of the contract.

Many factors are involved in assessing whether a worker is deemed to be an employee or contractor, and the relationship can change over time.

There is no single overriding factor in deciding if a worker is truly an independent contractor. Therefore, each working relationship must be assessed separately and individually.

Time to Upgrade Contractor Agreements

If a lawful agreement clarifies the terms of engagement and addresses all aspects of the working relationship, this will reduce the risk of later being penalised because of wrongly classifying a worker. But for the contract to be relied upon in court, it must address all aspects of the working relationship in enough detail that there is no room for misinterpretation of terms.

Now is a great time to review and upgrade any agreements you have in place with contractors. Do they measure up?

Talk to us about getting reliable agreements in place for all your independent contractors.

Access the ATO Contractor Decision Tool here.