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6 payroll changes every employer should know about

6 payroll changes every employer should know about

Promoted by Employment Hero.

Keep up to date with the regulation changes that have come into effect this financial year.

There’s been a lot happening in the world of payroll and employment law lately. The ATO introduced Single Touch Payroll (STP), the national minimum wage increased by 3.5 percent, new clauses have tightened up the timing of a departing employee’s final pay and much more.

In this article we round up and summarise the 7 changes in employment law and payroll that everyone should be aware of (everyone who considers keeping up with the latest regulations a priority that is).

1. Minimum wage increase

The national minimum wage increased by 3.5% as of July 1, 2018. The new minimum wage for adult full-time and part-time employees not covered by a modern award or enterprise agreement  is $18.93 per hour or $719.20 per per 38 hour week (before tax).  

The minimum wage rates in modern awards also increased by 3.5%.

In addition, there have been various changes to penalty rates in awards covering sectors such as the the retail, fast food, hospitality and pharmacy industries. If you work in these sectors it is definitely worth further research.

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2. Changes to termination payment

How soon after termination do you need to provide an employee with their final pay? On November 1, 2018, the rules around the timing of an employee’s final pay were changed in 89 modern awards. Employers operating under these awards must now pay employees no later than seven days after their final date of employment.

As mentioned, these changes are not being applied to all awards so employers should check the rules in the awards that apply to them. Certain awards may require a longer or shorter time period for final payment to a terminated employee. It is also worth noting that requirements regarding the timing of long service leave payment to terminated employees vary from state to state and should be checked when organising an employee’s final payment.

3. Single Touch Payroll (STP)

On July 1, 2018, the Australian government enacted STP legislation. STP requires employers to submit payroll and superannuation data to the ATO each time they run payroll. The easiest way to do this is to use a payroll software that is STP compliant.

These new changes allow the ATO to have greater visibility into a business, allowing them to ensure compliance with tax laws and regulations. It also provides a means of streamlining the end of financial year process. Thanks to STP, employers will not have to produce payment summaries or conduct other admin tasks related to the EOFY process.

Currently businesses with 20 or more employees on 1 April, 2018 are required to report under STP from 1 July 2018. By next financial year (1 July, 2019), STP should become a requirement for businesses with 19 employees or less. This is subject to legislation being passed in parliament but essentially everyone is going to have to fall into line with the ATO reporting requirements regardless of the size of their business.

The ATO is granting deferrals to employers whose payroll software is not ready to lodge STP and those who need more time to implement the right software.

14 FAQ PAYROLL QUESTIONS ANSWERED

Click here and find out what STP actually means for businesses and how you can quickly and easily get on top of it; What the modern award and minimum wage increases mean to businesses; and how to make sure that you’re always paying your people in accordance with modern awards.

4. Family & Domestic Violence Leave

A new clause has been added to all modern awards granting workers 5 days of unpaid family and domestic violence leave per year. This entitlement came into effect on August 1, 2018 and is applied to all workers employed under modern awards.

The entitlement does not apply to employees who are covered by enterprise awards, state reference public sector awards, enterprise or other registered agreements or employees who are agreement free.

Some businesses may have already included paid or unpaid domestic violence leave in their workplace policies. If this leave is for a period of less than 5 days then employees will still be entitled to 5 days leave as per the award requirement.

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5. Long Service Leave in Victoria

Victoria has released a new Long Service Leave Act that came into effect on November 1, 2018. This Act replaces the Long Service Leave Act 1992 and leads to significant changes in long service lead entitlements.

In summation, under the new Act:

  • Employees will be able to take long service leave after seven years of continuous service
  • Long service leave can now be taken in several periods of at least one day at a time
  • Unpaid parental leave of up to 52 weeks will now count as service
  • There is added protection for employees who resign and are reinstated
  • Long service leave for employees with varying hours will be calculated differently
  • Penalties have been changed, replacing civil penalties with criminal penalties.

Overall, these changes have been heralded as a great win for women, parents and carers across the state.

6. Casual conversion to permanent employment

On 1 October 2018, a model “casual conversion” clause was added to 84 Modern Awards that did not already include casual conversion provisions. The effect of this clause is that certain casual employees may be eligible to convert to permanent employment (i.e. full-time of part-time), if in the preceding 12 months, they worked a regular pattern of hours on an ongoing basis. A request made by a casual employee in such circumstances can only be refused by the employer on reasonable grounds and after consultation with the employee.

Employers are required to provide a copy of the new casual conversion clause to their casual employees within the first 12 months of employment. For employees who were already employed on 1 October 2018, employers will be required to provide a copy of the clause by 1 January 2019.

The remaining modern awards that already contained the casual conversion clause (e.g. the Hospitality Industry Award 2010) have not been varied. Employers should be proactive and look up the relevant modern award applicable to their business and employees to ascertain whether the new casual conversion clause affects them.

12 CRITICAL QUESTIONS TO ASK YOUR PAYROLL PROVIDER

Employment Hero is Australia’s leading HRIS and the easiest way for small to medium businesses to manage HR, payroll and employee engagement and benefits in Australia. Find out more about how we can help you or Request a demo today and learn how we can help your business reduce admin time by up to 80% and stay more compliant. 

6 payroll changes every employer should know about
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