With the new year underway, now is the time to take the courageous step of hiring the employee your business needs. You must ensure that your legal obligations are met, as the consequences can be brutal if they aren’t. This article summarises a few key obligations which must be met when employing staff:
Pay Modern Awards
Modern awards are industry or occupation-based minimum employment standards which apply in addition to the National Employment Standards (NES). They were created to govern the minimum conditions and requirements for employers and employees across Australia who work in the same industries and occupations.
Pay As You Go Withholding (PAYGW)
As an employer, it is mandatory to withhold amounts from payments you make to your employees (including directors & directors fees), other workers (in some instances contractors that you have voluntary agreements with), and businesses that don’t quote their Australian Business Number (ABN). The penalty to the ATO for failing to withhold PAYGW, is equal to the amount you should have withheld.
In most cases, you must pay your employees at least 9.5% superannuation (known as super guarantee) on their salary/wages. If the correct amount of super guarantee for employees is not paid to the correct fund by the due date then you may have to pay the super guarantee charge (SGC), which is not tax deductible. This amount includes an administration fee, interest and the shortfall between what you have paid, and what you should have paid.
When an employee stops working for your business their final pay will be determined on the nature of their termination. Employment can end for many reasons such as resignation, dismissal, redundancy and many more. Whatever the reason, it’s important to follow the rules about dismissal, notice and final pay. There are also different rights and obligations when someone is made redundant or when a business is bankrupt.
There are a few more extremely important obligations that need to be met when employing people. Contact Link Advisors and we can guide you through the process and ensure that everything is above board.