If you are someone who has recently started a business in Australia and are looking to find out more about your responsibilities as an employer, you have come to the right place.
As a business owner in Australia, it is vital that you seek understand and implement employment-related legislation and obligations towards your employees as well as seek employer legal advice if and when you need it.
Complying with your responsibilities is important to ensure that your business stays within the law and can also be incredibly helpful in boosting staff morale and reducing turnover rates. Thankfully, Australia has a well-developed employment system, designed to provide flexibility and certainty to both employers and their employees.Today, we look at everything you need to know about your obligations as an employer, so read on to find out more.
1. Pay And Entitlement Obligations
One of the most important obligations that employers should be aware of relates to pay and entitlements. The Fair Work Act 2009 (Cth) is Australia-wide legislation that governs employee-employer relationships. Under this legislation, employers are required to provide certain minimum requirements to employees, also known as National Employment Standards (NES).
It is crucial to pay your employees correctly and to ensure they receive all their entitlements. In Australia, the national minimum wage is currently $20.33 per hour or $772.60 per 38 hour week (before tax). Casual employees covered by the national minimum wage also get at least a 25% casual loading.
Pay slips must be issued to each employee within 1 working day of pay day, even if an employee is on leave. They should be issued electronically or on paper and must contain details of payments, deductions, and superannuation contributions for each pay period. If you are unsure of your responsibilities regarding minimum wage, payslips and employee entitlements, it is always advised that you consult an employment law specialist.
2. Tax Obligations
As an employer, you are required to be aware of PAYG (pay as you go) withholding and payroll tax. PAYG withholding a system that is used for withholding tax from payments to employees. If you run a business with employees, you are legally obliged to withhold a certain amount from their salaries to cover their income tax, Medicare levy and Higher Education Loan Programme (HELP) repayments. As a business owner, you are responsible for reporting and sending PAYG tax to the Australian Taxation Office (ATO).
PAYG withholding responsibilities include:
- Registering for PAYG withholding;
- Working out amount to withhold;
- Providing PAYG summaries to employees and
- Lodging annual reports with the ATO;
Payroll tax is imposed by each of the states and territories and will differ depending on where your business is located. Employers in Victoria are required to register and pay payroll taxes if:
- Your total Australian wages exceed $54,166 a month; or
- Your total Australian wages exceed $650,000 over the full financial year.
3. Paid Leave Obligations
All full-time and part-time employees in Australia are entitled to paid annual leave based on their ordinary hours of work. An employee is entitled to 4 weeks annual leave for each 12 months of service, or 5 weeks annual leave for certain shift workers for each 12 months of service. As an employer, you are required to pay annual leave at the employee’s base rate of pay for their ordinary hours during the period of leave. You cannot unreasonably refuse a request to take annual leave, and there is no minimum or maximum amount of accrued annual leave that can be taken at a time.
Full-time and part-time employees are also entitled to 10 days sick leave each year. Other obligations also include providing paid parental leave which you can find out more about here.
4. Superannuation Obligations
According to the Superannuation Guarantee (Administration) Act 1992 (Cth), employers are required to pay a certain percentage of a worker’s ordinary time earnings into their nominated superannuation fund. You must generally pay superannuation to an employee if they earn at least $450 before tax in a calendar month. If you fail to fulfil your superannuation obligations, your employees can report you to the Australian Tax Office (ATO).
5. Workplace Health and Safety Obligations
As an employer, it is vital that you provide your employees with a safe and healthy work environment. Under the Work Health and Safety Act 2011, you must assess risks and implement and review control measures to prevent or minimise employee exposure potential risks.
To properly manage exposure to risks, you must:
- identify workplace hazards;
- determine who might be harmed, and how;
- decide on control measures;
- put adequate controls in place; and
- review controls regularly.
Workers are also required to undergo health and safety training, including regular refresher training after a certain period of time. If you have made any changes to your business (e.g. to equipment, materials or processes), you will also need to update your training accordingly. Additionally, staff must be provided with PPE in order to keep safe when they’re doing their jobs. Training should cover arrangements for providing, using, storing and maintaining PPE.
6. Equal Opportunity Obligations
As an employer, you hold the responsibility to recruit staff in a non-discriminatory way and maintain a workplace that is safe and free from bullying, sexual harassment, victimisation or discrimination (you can find out more about this in the Equal Opportunity Act 2010 and the Racial and Religious Tolerance Act 2001). Additionally, it is illegal for employers to take adverse action against employees based on race, religion, sex, sexual preference, age, physical or mental disability, marital status, pregnancy, political opinion or social origin.
Under the Equal Opportunity Act 2010, employers have a positive duty to eliminate the aforementioned issues as much as possible. This means that positive action should be taken to prevent these behaviours – regardless of whether someone has made a complaint or not.
7. Employee Termination Obligations
Upon termination of employment, employers are required to notify employees of their under-performance or misconduct prior to termination, and must allow the employee to have a support person present at time of termination.
At point of termination, employees should receive the following entitlements in their final pay:
- outstanding wages still owing;
- pay in lieu of notice of termination
- accrued annual leave and long service leave entitlements;
- balance of any paid time off; and/or
- any redundancy pay or entitlements, if applicable.
Do keep in mind that the total duration of employment is considered when determining if termination is lawful or not. Small business employees (fewer than 15 people) will be able to apply for unfair dismissal after a minimum of 12 months, while employees in larger businesses are able to apply for unfair dismissal after a minimum of six months.
Although the number of obligations and responsibilities that fall under you as an employer are plentiful, it is vital that you remain compliant to local and federal laws in order to ensure the ongoing success and growth of your business. We hope that this article has offered you some valuable insight into all your obligations as an employer. Be sure to leave a comment if you have any questions or advice of your own to share!