Back to top of page

To ensure your payroll is correctly managed, you should have records of:

• Payments made to employees
• Records of super contributions
• Records of the super fund choice of your employees
• Records of pay as you go withholding (PAYGW)
• Records of fringe benefits

These records must be kept for five years – starting when you obtained or prepared the records.

Payment

As an employer, it’s crucial to understand your obligations when it comes to employee entitlements. This includes wages, awards, leave and allowances.

Employers need to pay employees for the work they do. Payroll includes keeping records of pay rates and conditions so that employees are getting paid the correct amount for their occupation and working arrangement.

There are a number of things to keep in mind:

• Payment of wages The Fair Work Act 2009 states that employers must pay employees at least monthly for the work they do. This allows employers to choose whether to pay their employees weekly, fortnightly or monthly. Whichever frequency you choose, it should be stated in an employee’s contract of employment that the employer has the right to choose the frequency of payments, in case it is to be altered in the future.
• Payslips Employees need to be given a payslip within one working day of being paid. Payslips can be given electronically or as a hard copy. Penalties apply for any payslips that neglect to include certain details including the employee’s contact details, ABN (if applicable) and pay period. False or misleading information will result in penalties. For example, miscalculating pay or underpaying an employee can mean significant fines for employers. Frequent noncompliance will often result in poor company culture and a poor reputation among workers, customers and stakeholders.
• Record-keeping Employers must keep accurate and up-to-date records. Employee payment records must also remain confidential.
• Income statements Income statements need to include payroll information required by the Australian Tax Office (ATO). Most businesses now are covered by Single Touch Payroll, helping employers streamline their reporting process to the ATO.

SUPERANNUATION

Superannuation is the money you pay to fund your employee’s retirement.

As an employer, your superannuation obligations include:

• Requesting Stapled Super information from the ATO when your new employees do not provide superannuation fund details.
• Giving your employees a choice of super fund or advising employees of your nominated super fund
• Give your employee’s Tax File Number (TFN) to their chosen super fund within 14 days of receiving their TFN declaration form
• Pay super contributions for eligible employees four times a year, by the quarterly due dates
• Pay the Superannuation Guarantee (SG) to eligible employees
• Pay and report super electronically, ensuring you meet SuperStream requirements
• Keep records of super contribution payments along with evidence that you offered a choice of a super fund to eligible employees

These obligations can become more complex depending on the salary packages offered by an employer. By utilising a smart payroll software, this can prevent miscalculations with processing superannuation.

TAX

Tax is often updated when award wages are updated. However, it’s easy for employers to be caught out.

Payroll tax is paid to each state and territory individually. Since all these zones have their own thresholds and payroll tax legislation, rates and exemptions as well as remittance schedules, it can be easy to make mistakes.

Australian State and Territory Revenue Officers regularly conduct audits and investigations to ensure all liable employers remain compliant with their state/territory payroll tax laws.

Penalties are imposed if employers fail to register and if they provide false or misleading information in their submitted payroll tax returns.

DEDUCTIONS

Payroll deductions are payments you make out of an employee’s earnings on their behalf, for the purpose of paying taxes and benefits such as health insurance.

Tax deductions related to payroll include:

• The salaries and wages you pay to employees 
• Super contributions you make on time to your employee’s chosen super fund 
• Training costs 
• Staff amenities 
• Small gifts or one-off rewards totaling less than $200 
• Workers compensation 

An employer cannot deduct money if it will benefit the employer directly or indirectly or if the employee is under 18 years of age and their parent/guardian hasn’t agreed in writing.

WORKERS COMPENSATION

Workers compensation is a form of insurance payment for employees who have become injured while at work or who have developed an illness due to their work.

Workers compensation is a compulsory statutory form of insurance for all Australian businesses.

Workers compensation includes payments to cover employees wages while they’re not fit to work and to cover their medical expenses and rehabilitation.

Workers compensation requirements do differ across different states, so it’s important to contact the worker’s compensation regulator in your state or territory.

Back to top of page

There have been several cases highlighted in the media of businesses underpaying their staff or failing to meet industry standards. The fallout of which has meant their brand and reputation have been tarnished and their growth significantly stunted as employees, customers and stakeholders revert away from their services.

To mitigate these risks and save your business from potentially costly payroll pitfalls, here are some of the things employers should be aware of when processing payroll.

National Employment Standards

The National Employment Standards (NES) are the minimum standards of employment in Australia, covering the following:

• Maximum weekly hours of work
• Requests for flexible working arrangements
• Parental leave and related entitlements
• Annual leave
• Personal/Carer’s leave, compassionate leave, family and domestic violence leave
• Community service leave
• Long service leave
• Public holidays
• Notice of termination and redundancy pay
• Provision of a Fair Work Information Statement and Casual Employment Information Statement
• Casual conversion

The NES applies to all employees covered by the national workplace relations system. However, casual employees are only entitled to some of the NES entitlements such as unpaid carer’s leave.

Penalties apply to businesses that breach these workplace laws. This includes businesses that fail to keep employee records and issue payslips in accordance with the Fair Work Amendment Act.

LEGAL OBLIGATIONS

There are legislative obligations impacting payroll in Australia. Employers need to be aware of these obligations and ensure their payroll team is equipped with the right knowledge and resources to meet them.

As an employer, you must be aware of the payroll liabilities you’re responsible for. Some of the top legal responsibilities that employers have related to payroll include employee wages, payroll taxes, payroll service costs and other deductions that may be withheld from employee wages.

Since these liabilities include money that must be paid at a future date, it can be very easy to overlook them.

LEGAL OBLIGATIONS

There are legislative obligations impacting payroll in Australia. Employers need to be aware of these obligations and ensure their payroll team is equipped with the right knowledge and resources to meet them.

As an employer, you must be aware of the payroll liabilities you’re responsible for. Some of the top legal responsibilities that employers have related to payroll include employee wages, payroll taxes, payroll service costs and other deductions that may be withheld from employee wages.

Since these liabilities include money that must be paid at a future date, it can be very easy to overlook them.

There are legislative obligations impacting payroll in Australia. Employers need to be aware of these obligations and ensure their payroll team is equipped with the right knowledge and resources to meet them.

As an employer, you must be aware of the payroll liabilities you’re responsible for. Some of the top legal responsibilities that employers have related to payroll include employee wages, payroll taxes, payroll service costs and other deductions that may be withheld from employee wages.

Since these liabilities include money that must be paid at a future date, it can be very easy to overlook them.

COMPLIANCES & RISKS

Navigating payroll laws and following industry practices can be challenging – whether you’re hiring your first employee or your 500th! One of the things employers struggle to get their heads around is that payroll isn’t strictly about paying employees.

In Australia, payroll compliance laws cover everything from wages to hiring & firing, entitlements, bonuses and work arrangements just to name a few.

To help you become aware of all payroll compliances, here is our 10 point compliance checklist that ensures a compliant and efficient payroll.

Your obligation as an employer is to keep accurate records and provide payslips to employees. Failing to comply can have negative financial and reputational consequences for your business.

MODERN AWARDS

It’s important to keep up with ongoing changes within modern awards.

A modern award is a document that sets the minimum terms and conditions of employment on top of the National Employment Standards (NES) and the Fair Work legislation.

Since coming into effect in 2010, modern awards provide entitlements including pay, hours of work, rosters, allowances, breaks, penalty rates and overtime.

Modern awards apply to all employees covered by the national workplace relations system.

Failing to understand the requirements of the modern award can lead to serious ramifications including:

While determining modern awards and related classifications can be confusing and time-consuming, this legislature must be reviewed and adhered to.

Back to top of page

Single Touch Payroll

Single Touch Payroll (STP) is an initiative set out by the Australian Government to make reporting easier for businesses.

STP started in 2018, with businesses of more than 20 employees reporting employee payroll information to the ATO using STP-enabled software.

In 2022, this initiative will expand to include all businesses/employers. The expansion, known as STP Phase 2 or STP2, will allow employers to report to multiple government agencies using their payroll or accounting software.

With STP and STP-enabled software, businesses can report employee payroll information each time they’re paid. This information includes:

Before STP was introduced, businesses were reporting their payroll data every month, quarterly or yearly. This proved to be efficient yet extremely slow and burdensome in terms of transferring data. It was then that the ATO introduced STP as a more effective way of streamlining the reporting process.

Back to top of page

Using payroll software systems can save time and make the entire payroll process far easier, especially for smaller businesses.

Payroll software comes with- many benefits. These include:

• Greater accuracy

  One tiny mistake can be costly when it comes to processing payroll. Avoid heavy penalties and fines with a payroll software system that reduces the likelihood of human error and ensures that your employees are paid accurately and on time, every time. 

• Easy to use

  Running payroll can be a real challenge, even for those who have an accounting background. With payroll software, training tools and support features are integrated, allowing staff members with little to no experience in payroll to easily navigate the system. Payroll software does not require any formal training, meaning you can assign the payroll task to employees without experience in processing payroll. 

• Customisable

  Top payroll software systems can be fully-customisable to meet the needs of each business such as tailoring to meet your contracted individual flexibility arrangements as all modern awards offer flexibility arrangements which most companies use. A payroll system that allows customisation to suit such requirements is extremely beneficial. 

• Enhanced data security

  Protecting employee confidentiality is paramount. Since your payroll records contain sensitive information including addresses and banking details, you need to make sure that this data is protected. Payroll software uses state-of-the-art security to keep payroll data protected. 

On top of that, payroll software incorporates key functions and features to make tedious tasks a breeze. These include:

• Payroll processing: From timekeeping to calculating overtime and awards, payroll software provides a complete end-to-end processing solution to help you take care of every aspect of the payroll process. 
• Automatic deposits: Most payroll software can connect with banks and deposit payments directly to the employee’s bank account straight away. 
• Tax filing help: File taxes on time with payroll software that supports automated calculations that can pre-fill employees’ tax info. 
• Accounting help: Most software solutions provide certain accounting functions that can help streamline the entire finance process. 
• Compliance tools: Payroll software helps you to navigate the ever-changing compliance laws of your local and federal legislation. This means your business will always remain compliant and adhere to changing tax laws. 
• Integration: If your business already possesses a robust HR system, then you want a software solution that can integrate into your existing framework. Luckily, most payroll software solutions provide integration with many other accounting and payroll applications. 
• Scalability: There’s always a chance that your business will expand later down the road. For this reason, choosing a scalable payroll system will allow you to scale both up and down as your business changes.

Back to top of page

The Australian Payroll Association reported that 60.6% of these payroll professionals were looking to develop their skills in legislative compliance whilst 42.9% needed training with award and EBA interpretations. Engaging with an outsourced agency removes the risk of knowledge and competency.

As a business grows and its requirements become more complex, employer’s should really be looking at an outsourcing partner to mitigate risk and maintain payroll efficiency.

There’s so much that can go wrong which can include:

• Not having in house skills to cover when the payroll processor is on leave
• Manual calculations costing the employer time and increases the risk of mistakes in payroll or award based calculations
• Not having the resources in house to stay up to date with payroll knowledge and legislation

These complications and the risk of human error is high when you’re relying strictly on in-house processes. By placing an expert in control of your payroll processing, you can focus more on your core business functions and have peace of mind that you are providing the best for your employees.

So what is the difference between in-house and outsourced payroll? Fully outsourced payroll means hiring an outside company to handle all the work. This takes the pressure off in-house teams and gets rid of the challenge in-house teams face when navigating today’s highly complex regulatory environment.

Some advantages of outsourcing payroll include:

Every business has different payroll needs, however as a company grows, so do the risks involved. Considerations need to be made about processes, compliance, legislative regulations and other moving parts when managing payroll. For that reason, outsourced payroll is highly recommended.

Employment Innovations payroll is supported by a legal team to help your business navigate the constantly changing legal and payment obligations of every industry.

Outsource the stress with Employment Innovations Outsourced Payroll Services to help your business grow and prosper.

Back to top of page

Underpayments and wage theft have made headlines in Australia over the past couple of years! Businesses across all industries and sizes have been caught off guard and thrust into the spotlight. In fact, the Fair Work Ombudsman found 71% of the 1,432 workplaces they investigated in 2019-20, were found to be non-compliant..

Take Employment Innovation’s complimentary 10 Point Payroll Compliance Check to ensure compliance and help identify areas of risk across your payroll.

Managing payroll is a very meticulous task and one that can prove daunting for many businesses. Any minor error or failure to meet and comply with the latest industry standards can prove extremely costly, bringing about the risk of financial difficulty and reputational damage to your business. While in-house allows HR teams to exert some control over business finances, challenges in payroll processing are inevitable. With help of an outsourced payroll provider, you can get peace of mind knowing that your payroll process is being handled by an accurate, trustworthy and efficient service.

Reach out to the team to get more information on how you can save time and money with Employment Innovations payroll services.