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Employee Checklist - Sink or Swim in the Peak Season

December and January are busy months and for most people they’re filled with holidays and festivities. However there are a variety of challenges in the business sphere. Many businesses are forced to take on new staff to keep up with demand during this peak period. Research has also shown that January is the most common month for employees to leave their current employment. To be on the receiving end of employees, not the leaving end, Natasha’s article can give you some tips on how to retain staff.

When managing your own business and taking on staff, you have an important responsibility as an employer to make sure you are complying with your obligations and reporting the right information. Because of this it is important that businesses adopt an effective compliance process in how, and what, information is shared with employees and authorities. So, let’s take a dive in to the employee checklist of what needs to be done, whether it’s for someone coming on board or jumping ship.

Contents

Hiring - Considerations & Requirements for Someone Coming on Board

 

First time employers

If you are a first-time employer, Kirstie’s blog on employer obligations gives a run down on what tools and registrations you need prior to hiring new staff, including:

  • Registering for pay as you go withholding (PAYGW)
  • Setting up Single Touch Payroll (STP) enabled software
  • Ensuring you are set up to pay super
  • Reviewing your requirement to register for payroll tax

The Business.gov.au website has a great, and very detailed, employee checklist when hiring employees that you can work through. Here are some of the key steps and take-aways:

  • Decide on the employment type

Depending on the requirements of the job, you might want a:

  • Full-time or part-time employee
  • Fixed term (non-ongoing) employee
  • Casual employee
  • Trainee or apprentice

When deciding from the above its worth thinking is the business expanding and you need someone permanently or is it only busy during a seasonal rush and you need extra staff specifically during this period.

  • Awards and minimum pay

One of your most important obligations as an employer is that you are paying your staff correctly and providing adequate terms and conditions. For most employees, employers can find the minimum pay rates, in the relevant award for the particular industry or occupation.

The Fair Work Ombudsman’s has numerous tools such as their Find My Award and Pay Calculator tools to help you make sure you find the correct amount to pay under the award and information such as:

  • Types and classifications of employees
  • Hours of work and rosters
  • Breaks
  • Allowances
  • Penalty and overtime rates
  • Leave
  • Super

Not all employees are covered by an award or agreement, but none the less all employees in Australia are entitled to:

  • Information you need to receive, provide and report?

Once you have prepared your job description, advertised the position, evaluated applications, interviewed candidates, and checked their qualifications, it’s time to make the employment an offer.

Once the offer is accepted and prior to your employee starting you must provide them with the following:

On their first day, you’ll need to make sure they bring the following information to ensure you can have them set-up correctly and report the correct information:

  • a copy of the signed employment contract
  • a completed tax file number declaration
  • a completed choice of superannuation form
  • the employees bank details (bank name, BSB and account number)
  • details of their emergency contact (including name, address, phone number and relationship)
  • copies of any licenses or qualifications they need for the role.

Recent updates

Online TFN Declarations:

You can now get a TFN Declaration completed online by your new employees. Your employees can access and complete pre-filled commencement forms through myGov by going to their linked ATO online services then going to Employment, then New employment.

To complete the forms, your employee needs to know:

  • your ABN
  • their employment type (for example, full time, part-time, casual)
  • the details of the super fund they would like their super to be paid into
  • the following details if choosing your default super fund: fund name, unique superannuation identifier (USI), ABN.

Once the form is complete, employees need to print the employee tax and super details summary and provide it to you.

You then enter the information into your system and keep a copy of the form for your records. You then do not need to submit the employee tax and super details summary to the ATO.

TFN Declaration Submission with STP:

In the 2019–20 Budget, the government announced that Single Touch Payroll (STP) would be expanded to include additional information.

The expansion of STP at the start of 2022, also known as STP Phase 2, has reduced reporting burden for employers who need to report information about their employees to multiple government agencies.

This has numerous benefits to employers including the fact that employers no longer have to send the ATO employee’s TFN declarations. Your employees will provide it to you, and you'll need to keep it with your employee records.

Prior to these employers had to submit TFN Declarations with the ATO within 14 days.

Interesting fact:
If your employee fails to provide you with a Super Choice Form, we can help you request the relevant information from the ATO directly.

Employer obligations

Kirstie’s blog also covers this in detail, as she steps through employers need to meet their tax and super obligations, including:

  • PAYG Withholding
  • Superannuation Guarantee
  • Fringe Benefits Tax (FBT)

Resignations – What to Do When Someone’s Jumping Ship

 

Final Pay

Most awards say that employers need to pay employees their final payment within 7 days of the employment ending. Employment contracts, enterprise agreements or other registered agreements can also specify when final pay must be paid.

If an employee's award, contract or agreement doesn't say when an employee's final pay must be paid, then it's best practice for an employee to be paid within 7 days of their employment ending.

When an employee voluntarily leaves their final pay may include a variety of components including lump sum payments. These payments may be taxed and reported differently to your employee’s usual wages and may include:

  • Outstanding wages for hours they have worked, including penalty rates and allowances
  • Any accumulated annual leave, including annual leave loading if it would have been paid during employment
  • Accrued or pro rata long service leave

Sick and carer’s leave is not paid out when employment ends.

  • Different components

Unused Annual Leave:

Calculate any outstanding annual leave entitlements owed to full-time or part-time employees.

Payments of unused annual leave on termination of employment are subject to PAYG withholding. You need to know how to calculate the correct withholding and how to complete the employee's payment summary.

If an employee gets annual leave loading during employment, then it also has to be paid out when employment ends. Annual leave loading is paid out even when an award, registered agreement or employment contract says that it’s not.

Long Service Leave:

Most employees' entitlement to long service leave comes from long service leave laws in each state or territory. These laws set out:

  • How long an employee has to be working to get long service leave (for example, after 7 years)
  • How much long service leave the employee gets.

Any unused long service leave has to be paid out at the end of employment.

Payment of pro-rata long service leave:

When employment ends before an employee has worked the total number of years needed to get the full long service leave entitlement, they can sometimes get paid out part of their long service leave. This is known as pro-rata long service leave.

Whether an employee gets paid out pro-rata long service leave when their employment ends depends on the long service laws in the state or territory they work in.

Superannuation:

Employment termination payments and unused leave payments do not typically form part of an employee’s ordinary times earnings meaning that super guarantee is usually not paid on these amounts.

  • Finalise STP data

Once an employee has received their final pay, you will need to update your STP software to notify the program that the employee is no longer working in your business.

This finalisation process will create a tax ready income statement which the employee can use when preparing their tax return. You can complete this finalisation process following the employee’s final pay and do not have to wait until the end of the financial year.

Although we are not employment lawyers, our team are able to assist with tax and super-related payroll queries. We can put you in touch with the right people for employment contracts, suggest payroll software solutions and ensure your ATO registrations and super obligations are up-to-date. BLG Business Advisers are Wollongong Accountants who service all around Australia, so as always don’t hesitate to reach out for a chat for assistance in this important area of your business!

 

*This information is relevant at the time of publishing and is subject to change*
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