SME HR Essentials | Part 2- Pay & Compliance
Growing your team can be daunting. What do I really need to know? Where do I start?
Seed People Consulting is proud to present a Four-Part series of SME HR Basics to help you set up your business with the core HR requirements (as well as a couple of bonus points!) to ensure you’re compliant, organised and ready to hire, motivate and manage a capable and supported team.
The maximum penalties for employers found to be breaching record-keeping laws has recently doubled, so it’s important to stay on top of your obligations!
In this Part 2 of 4, we will cover the following topics:
- Record keeping requirements
- Compliance with Awards
We know we need to pay our employees at least once a month for the time they work, but what do we include in any pay correspondence? Fair Work have a great guide on this as well as a template for pay slips.
Here are the nuts and bolts of payslips: At a minimum, you must ensure you’re providing a payslip to each of your employees within one day of them receiving their pay. This payslip needs to include the following details:
- Both your (the employer) and employee’s names
- Your ABN or ACN
- Pay period and date of pay
- Gross and net pay
- The rate of pay along with any loadings, allowances, bonuses etc
- Any deductions and where the payment went
- Superannuation contributions
Some payroll systems will enable you to also include additional information such as leave balances and personalised messages for your team, but these are not must haves for your payslips.
Record Keeping for SMEs
Employee records need to be kept for 7 years in a legible, accessible and accurate manner. If you fail to keep records, a Fair Work Inspector may issue a fine and you may be taken to court.
At a minimum, you need to keep the following records:
- General information (i.e. employment contract with the employee’s name, start date, whether they’re full-time, part time or casual etc)
- Hours of work
- Flexibility agreements (if relevant)
- Guarantee of earnings (if relevant)
- Termination details (when and if this occurs)
Remember – records are private and confidential and should only be available to you, the employer, the employee, relevant payroll/HR team members and Fair Work Inspectors. Keep them in a confidential area only accessible by these people, to ensure you maintain your confidentiality obligations.
Knowing when and how much Superannuation to pay your employees can seem complex – following these basic steps and visiting these websites will help you to know you’re doing the right thing.
Generally, if you pay an employee $450 or more (before tax) in a calendar month, you have to pay super guarantee (SG) in addition to an employee’s wages. If your employee is under 18, they must also work for more than 30 hours per week to qualify.
The current rate of compulsory employer superannuation contributions in Australia is 9.5% which is to say that for each $10 you pay your employee, you would also pay $0.95 into their registered and nominated Superannuation fund.
Super is payable to employees regardless of whether they are full-time, part-time or casual; if they are a permanent or temporary resident and also whether or not they are a company director or a family member who is an employee. Provided they are eligible as per the above guidelines, you will need to pay the relevant amount of superannuation.
The ATO has a number of useful tools and additional information related to your Superannuation obligations as a business owner. Visit the ATO website, or speak to your Accountant or Financial Adviser, to get started.
Compliance with Awards
In Australia, our workplaces are governed by a Federal system which is overseen by the Fair Work Ombudsman (excepting State Government employees, who are covered under the relevant State Award or Agreement). The Federal system provides Awards which set out the minimum employment conditions for employees, relative to their job roles and/or industry in which they work. Most employees will be covered by an award or registered agreement however a few jobs and industries are not.
To check a specific job or industry, visit the Fair Work website.
You cannot ‘contract out’ of the minimum Award conditions; this means that, even if you and your employee agree to a wage rate, for example, which is less than the Award’s minimum rate, you are still breaching the Award and could be fined and subject to an underpayment of wages claim. If you need some flexibility in the terms and conditions you offer employees, and these are ‘better off overall’ for your employee, then you may like to consider an Individual Flexibility Arrangement.
Need more information?
Seed People Consulting offers the Seed HR Hub; a self-service online portal, available 24/7, including a number of templates, policies and guidelines that can be amended and branded to suit your business. Visit our website to find out more.
What’s coming up next?
In the next issue of our Four-Part Series, we will focus on Work Health & Safety, covering all your SME essentials on:
- What legislation applies?
- What is my duty of care?
- Managing Safety
- Workers Compensation and Insurance