You and your employees have certain obligations to each other under common law. You also have obligations under Federal and State & Territory laws, industrial awards and agreements, tribunal decisions and employment contracts.
DO YOU NEED TO REGISTER FOR PAYG WITHHOLDING?
If you have employees you must register for PAYG Withholding and withhold amounts including:
- Income Tax for employees (including working Directors of a Company).
- Withhold 46.5% from payments to suppliers who cannot quote an ABN.
Before you withhold any payments, you need to register for PAYG Withholding. Like your GST registration, this can be completed at the same time and means that you will have either quarterly or monthly reporting requirements.
If you are a Sole Trader or Partner, the Tax Office do not regard you as your own employee. You ‘draw’ money from the business to live on but this is not technically seen as normal ‘salary and wages’. As such, there is no need to register for PAYG Withholding and withhold amount from your drawings unless the above examples apply.
DO YOU HAVE TO PAY SUPERANNUATION FOR EMPLOYEES?
The Superannuation Guarantee Scheme, administered by the Taxation Office, requires all employers to provide a prescribed minimum level of superannuation support for each employee, subject to limited exemptions including:
- You paid a salary or wage of less than $450 in a month; or
- The employee is under 18 years of age and worked less than 30 hours a week; or
- The employee is aged 70 years or over.
Employers must make the superannuation contributions on at least a quarterly basis. Payments must be made within 28 days of the end of each quarter.
|1 Jul – 30 Sep||due by 28 October|
|1 Oct – 31 Dec||due by 28 January|
|1 Jan – 31 Mar||due by 28 April|
|1 Apr – 30 Jun||due by 28 July|
If you fail to pay the minimum level of support (9%*) by the prescribed deadline you are liable for the superannuation guarantee charge which is equivalent to the amount of the shortfall, plus an interest component and an administrative charge.
* for superannuation purposes, the definition of an employee is broad and in some instances you may have to pay superannuation on contractors.
CHOICE OF SUPERANNUATION FUND
Since 1 July 2005, employees can choose which superannuation fund their employer superannuation contributions are to be paid into. As an employer there are three steps you need to follow in order to meet your obligations:
1: IDENTIFY YOUR ELIGIBLE EMPLOYEES
Your employees can generally choose their super fund if they are:
- Employed under a federal award.
- Employed under a former state award, now known as a ‘notional agreement preserving state award’.
- Employed under another award or agreement that doesn’t require superannuation support.
- Not employed under any state award or industrial agreement (including contractors paid principally for their labour).
STEP 2: PROVIDE A STANDARD CHOICE FORM TO NEW EMPLOYEES WHO ARE ELIGIBLE TO CHOOSE A SUPERANNUATION FUND
You need to provide your employees with a Standard Choice Form (NAT 13080) which can be downloaded from the ATO website. This needs to be done within 28 days from the day they start work. They are not required to complete the form if they don’t want to nominate a fund, but you do have to give them the choice if they are eligible.
If an employee does not choose a fund you must pay the superannuation contributions for that employee into the fund you have identified as your employer nominated (default) fund. You need to make sure that the Standard Choice Form includes your employee’s tax file number, so that any contributions you pay are not returned to you by the super fund.
STEP 3: ACT ON YOUR EMPLOYEE’S CHOICE
Once your employee chooses a fund, you have 2 months to arrange to pay contributions into that fund. You need to start paying superannuation contributions to an employer nominated fund if:
- An employee does not choose a fund after 28 days.
- You have not accepted their choice of fund because they have not yet provided all the information you need.
WHAT IS AN EMPLOYER NOMINATED FUND?
Your employer nominated (default) fund is the fund you pay an employee’s superannuation guarantee contributions to if they do not choose a fund. The superannuation fund you choose must be a complying fund and from 1 July 2008, it must also offer a minimum level of life insurance. The insurance cover must comply with the following requirements:
- A premium of at least $0.50 per week for those under 56 years of age
- The level of insurance cover must equal or exceed that shown in the table below; or
- If the contributions are made to a defined benefit fund on behalf of a defined benefit member the cover must equal or exceed that detailed in the table below.
|Age Range||Minimum Level of Insurance Cover|
It is illegal for a superannuation fund to provide benefits to you as an incentive to use their fund as your default fund.
You must keep records that show you have met your obligations including:
- Records that show that a Standard Choice Form has been provided to all eligible employees.
- Details of employees who do not have to be offered a choice of super fund.
- Receipts or other documents issued by the super fund showing you have made superannuation contributions to an employee’s chosen fund.
- Records confirming your employer nominated fund is a complying fund and meets the life insurance requirements.
As well as your business insurances, you are also legally required to have workplace injury (WorkCover) insurance if your business falls into one or both of the following two categories:
- You pay or expect to pay more than $7,500* in wages, benefits and superannuation for employees.
- You employ apprentices or trainees.
If neither of these categories apply to your business, a workplace injury insurance policy is not a legal requirement. However, you should be aware that WorkCover has different classifications for ’employee’ and ‘contractor’ and this can determine whether you need a policy or not. A quick visit to the Victorian WorkCover website should clarify this issue. Type ‘workplace injury insurance’ in to the homepage and do a search. We can assist you in registering for WorkCover and have a preferred insurer.
* Current rates as at the date of publication
If an injured worker applies for compensation, you must complete your section of the Compensation Claim Form and return it within 10 days of:
- Knowing about the injury; or
- Having the injury reported to you; or
- The relevant authority requesting this information from you.
You must take all reasonable steps to help with rehabilitation and suitable duties while a worker is receiving compensation.
WORKPLACE HEALTH & SAFETY
Each state has legislation regarding workplace health and safety. This legislation places an obligation on every employer to ensure workplace health and safety of their workers and any other person at a workplace. This includes people like visitors, salespeople, and passing pedestrians.
DOCUMENTS RELEVANT TO RECRUITMENT
Documents that are related to the recruitment process may in fact be crucial to the operation and enforcement of laws relating to recruitment. Some of the numerous documents relevant to the recruitment process and the legal issues related with these documents include:
- Advertisements – employers must be careful not to breach equal opportunity laws.
- Instructions to Employment Agencies – employers should put their instructions in writing to avoid confusion over what is required and the authority of the agent.
- Application Forms – equal opportunity laws should not be breached and certain personal information should be carefully handled.
- Employment offers should be carefully worded – Once the offer is made and accepted, then a contract is formed and certain rights and obligations arise.
- References – written references require careful handling. Defamation of an individual is possible if these documents are not properly handled.
RECORDS YOU NEED TO KEEP
- Records relating to payments to Employees
- Tax File Number declarations and withholding declarations
- Withholding variation notices
- Worker payment records
- PAYG payment summaries
- Annual reports
- Superannuation records, and
- Records of any Fringe Benefits provided.