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.

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.

Business tips: Hiring employees

In business, the people you hire are some of the most important assets in your business.

They’re your trusted workforce, the face of your brand and the people you entrust with growing your business.

Because of this, it’s vital that you choose the right talent, the right personalities and the right mix of people for your team. Making a mistake with your hiring can really hold you back, so be sure to put some real thought into who you need on your team.

Consider which roles you need 

From a staffing point of view, you need to think about what roles will be needed to grow your business and operate effectively.  

Can you do everything yourself and become a real jack-of-all-trades? Or do you need sales people, marketers, operations managers and shop-floor staff to get this thing going?

In an ideal world, you obviously want a big, effective team to run your operations. But payroll costs and your available funding can put a limitation on this.

Think about which roles you REALLY need and whether you can manage with a skeleton crew (but without the need for a ghost pirate ship!) or invest in more people.

Decide whether to outsource or go in-house

Something to consider is whether any of your business positions need to be full-time, in-house employees? Or if some roles can be part-time, or outsourced to freelancers and contractors?

Having full-time employees on the books gives you a permanent resource, with a team who are wholly focused on growing your business.

But employees are costly. Aside from monthly wages, you need to pay for holiday pay, sick pay and a staff pension scheme. A more cost-effective option can be to use freelancers, hiring in talent and resources as and when you need them.

Search your network for talent

Knowing the roles you need is one thing, but actually FINDING the talent is another.

Use your existing business and social networks and put out the word that you’re hiring. Word of mouth can be a great way to find people, but make sure that applicants fit the stated criteria.

Writing short, clear job descriptions for each role is a good way to outline the position, attract the best candidates and filter out the weak applicants.

Using a recruitment agency or a jobs website helps to spread your net wider and also takes some of the admin workload away. Once you have a shortlist of candidates, it’s time to start interviewing.

Check that applicants share your vision and values

A job interview is obviously about more than just running through the skills on a CV.

The successful candidate is going to be working very closely with you, so you need to know that they can do the job but also that they’re a good fit for the team.

Do they share your vision for the product/service and the future of the company?

Do they seem driven, with the right kind of can-do attitude?

Are they engaged by your company values and the WHY behind your business model?

And, vitally, do you get on with them as a person?

Having the best mix of personalities and talent in a team is so important. Getting the mix right creates a tight, well-focused team. Get it wrong and you’re looking at disharmony, a lack of productivity and a team that’s just not going to deliver the energy and value you need as the business owner.

Measure performance and fit

Once you’ve hired the challenges don’t stop.

As you all pull together to grow your business, you’ll need to have ongoing performance reviews. This includes checking in on how the team is performing as a group, whether there are any problems to iron out and how individual employees are tracking against their personal remit, targets and goals.

It’s not an easy ride, but with a positive, well-engaged team behind you, you give your business the best possible chances of success, growth and long-term prosperity.

Talk to us about Payroll Services including PAYG Withholdings, and STP setup. Ensure your staff are paid the correct rates and paid according to the correct hours worked.

Cashing Out Annual Leave

Are your staff asking to cash out annual leave? 

There are some important rules to remember before paying out annual leave.

Firstly, you must review the employee’s modern award to check that cashing out leave is explicitly allowed.

Most awards do allow for excess annual leave to be paid out, and we give you the general rules here – but you need to check the relevant award for special regulations before agreeing to cash out leave.

Common Rules for Cashing Out Leave

• The leave must be paid at the same rate as if the employee takes the leave. That means you must pay leave loading if it applies, and super is always payable on cashed out annual leave.
• The employee must have at least four weeks of leave left available after paying out any excess amount.
• You can’t pay out more than two weeks of leave per year.
• While leave accrues as usual when an employee takes leave, you don’t need to accrue leave on cashed out leave.
• You need to have a written agreement with the employee, stating the number of hours being paid, the total amount and when you will pay it.
• Remember to check the employee’s award first and keep all records and calculations!

You Can Direct Employees to Take Excess Leave

You can't force an employee to cash out leave, but you can ask an employee to take leave in some circumstances. If you have employees accruing a lot of leave, check the award for guidance. For example, some awards allow an employer to direct an employee to take one week or more of leave if they have more than eight weeks accrued, give at least six weeks’ notice, and leave at least six weeks of leave available.

Need Help?

Remember, annual leave is paid out when an employee leaves your business, so it’s good to keep an eye on how much is owing and not let too much accrue.

Also, employees should be taking leave regularly for their health and wellbeing.

If you need help, talk to us, and we can review your payroll, leave accruals and modern awards to help manage employees’ annual leave.

Employee Super changes from 1 November

From 1st November, if you have any new employees start work with you and they don’t nominate a specific superannuation fund, you may need to request their ‘stapled super fund’ details from the ATO.

We can help you with this.

Choosing a super fund

Most employees are eligible to choose a super fund when starting a new job. However, sometimes an employee might not make a choice.

For example, they might omit to complete the form, or they might not know the details of their existing fund or whether they actually have one.

This situation could leave the employer at risk of not meeting their superannuation guarantee obligations and incurring penalties.

Employers can request an employee’s ‘stapled fund’ (a fund linked to an individual) details from the ATO, starting from 1st November 2021.

What employers need to do from 1st November 

There are 3 steps.

1. Offer eligible employees and contractors a choice

When a new employee starts work, they can either specify a fund or decide to go with your default fund. Either way, you have an obligation to offer them a choice and pay super contributions into their chosen fund.

2. If no choice is taken, request details of stapled fund from the ATO

If the employee doesn’t make a choice. You can lodge a request for details of their stapled fund through ATO online services. You will need to provide the employee’s TFN and personal details.

3. Pay super contributions into the stapled fund

Where the ATO provides details of a stapled fund you must pay super guarantee contributions into it.

Essentially, you must take all steps you can to allow employees choice of super fund. But in cases where all avenues are exhausted you can use your default fund.

As your BAS Agent, we can lodge ATO requests for stapled funds on your behalf, including bulk requests where there are 100 or more new employees.

Get in touch. We’re here to help!

Could a 4-day week be a good fit for your team?

The pandemic has acted as an impetus for reflection, with many workers and business people reassessing the hours they work and the priority that work has in their lives.

A survey from Slack showed that 72% of respondents would prefer a hybrid approach to work – i.e. a mix of remote and office work. But there’s also a growing belief that we should be working fewer hours too and aiming for a ‘4-day week’. This would mean less time in the workplace and more time with our friends and families, with a greater level of underlying happiness as a result.

But do your people want to work fewer hours? Is the company ready to cope with a reduced staff on hand to get the job done? And what is the overall impact of working a shorter week?

The advantages of a 4-day week

The suggestion of a 4-day week is something that's been around for a while, but increasingly there's a ground-swell of support for the idea of working shorter hours and achieving a better work/life balance as a result.

In Iceland, 2,500 workers (1% of the total Icelandic population) took part in a trial of the 4-day week between 2015-2019. Most workers moved from a 40-hour week to a 35 or 36-hour week, giving them one extra day to focus on things outside of the workplace. The trail was a big success and has resulted in 86% of Iceland’s workforce now working reduced hours.

As a business owner, you’re no doubt already thinking ‘But how can my business still function if my employees are working less hours and are being less productive?’. But the interesting outcome was that productivity wasn’t negatively affected by this move to reduced hours.

So, could a 4-day week actually be a good fit for your team?

Your employees are just as productive

A 4-day week was trialled by New Zealand company Perpetual Guardian and the results were surprising. After spending two months testing a 20% shorter week, they found that their employees were ‘happier, more focused, and producing the same amount of work’. The Icelandic trial found the same result, that workers were equally as productive, with no drops in output, when working for only 4 days in the week.

Your team still earns the same money

One potential worry for your employees is a drop in pay if they are working less hours. But under a 4-day work scheme, you continue to pay your team the same wages or salaries. So, although your employees are working less hours, there’s no drop in their income and no resulting money worries.

Your team is happier and more engaged 

Results of 4-day week trials globally have shown that employees on reduced hours are happier, more engaged and more energised for their work. So, rather than pushing your team to work a 40+ hour week and risking fatigue, burnout and disengagement, you ease off on the throttle. This give your employees a less pressurised work environment and a better level of happiness. And, as we know, a happy workforce is also a productive workforce.

A more sustainable business model

With your people spending less time in the office, factory or workspace, your business will be using fewer resources – and having less of an impact on the planet. Your utility bills will reduce, you’ll need fewer office supplies and your people won’t be commuting as frequently – all of which is great for your carbon footprint and the overall sustainability of your business.

Talk to us about the financial impact of a 4-day week.

Adopting a 4-day week does have a range of different benefits for your employees. And creating a happy, productive and engaged workforce is always a good thing to achieve.

If you’re concerned about the financial impact of a 4-day week, come and talk to us. We can look at your sales and revenue figures, alongside your staff utilisation numbers, to show you how your margins can remain the same (or even higher) by adopting a reduced working week.