Payroll and HR departments confront various issues, including timely payment of employees and ensuring that they are paid the correct salary, but compliance is one of the most significant.
There are several areas to address, from complying with the General Data Protection Regulation (GDPR) and the National Living Wage to correctly delivering workplace pensions and ensuring the right systems are in place for your payroll year-end.
It’s also critical that your company keeps accurate documents to prove its compliance.
Using an effective payroll software system can assist you in accomplishing this while also keeping your staff pleased.
Labour laws govern how you pay your employees, pay your taxes, and report on all of this information. As a business, it’s critical to ensure that you stay payroll compliant.
Employers who fail to meet their payroll responsibilities face financial fines, interest costs, lawsuits and the possibility of losing their business entirely.
You can avoid them by having a better understanding of payroll compliance so let’s start with the Australian payroll guide…!
Why is payroll compliance important?
You probably have seen the employee underpayment in the news in Australia, with a long list of underpaid workers.
Wage theft can carry severe consequences, including damage to one’s reputation, hefty fines, and the possibility of jail time. In addition, the Fair Work Ombudsman (FWO) has the authority to impose its own sanctions.
Both the Victorian and Queensland state governments have passed legislation making pay theft a criminal offense as of 2020.
It might be as easy as a little odd system setting that leads to a catastrophic breach for your company. These breaches can go unreported for years before being discovered, and when discovered, they can make or ruin your organization.
With Australian regulations tightening and public tolerance eroding, no organization or business is immune to a payroll compliance onslaught.
Payroll compliance is difficult and time-consuming, so we’ve outlined the following information to help you get started and know everything before you reach Australian payroll providers.
Quick payroll terminology in Australia
Before we dig deeper, let’s talk about payroll terminology.
Wage: A set amount of money that is paid on a regular basis in exchange for labor or services. Wages and perks are affected by age, industry, qualifications, and job duties and responsibilities. The full-time minimum wage in Australia is based on a 38-hour workday, with a 2.5 percent rise set to take effect in 2021. Although the minimum wage serves as a starting point for employee compensation, the majority of employees are covered by an award.
Awards: Minimum employment standards and pay based on an industry or occupation, in addition to the National Employee Standards. Search the Fair Work Ombudsman’s (FWO) website for applicable awards; keep in mind that awards issued this year will be subject to revision as part of a scheduled review procedure.
Enterprise Agreements: Contracts that govern the working conditions of a group of employees at one or more workplaces are known as enterprise agreements. You can make your own to represent your company’s specific requirements. If you use an agreement instead of a modern award, the agreement’s pay rate must be at least as high as the pay rate in the applicable modern award.
Five pillars of payroll compliance
The National Employment Standards (NES) are a set of ten minimal employment rights that will be offered to every employee in Australia. You need to adhere to each of them as an employer.
- Weekly hours maximum.
- Requests for more flexible working hours.
- Offers and requests to change from part-time to full-time work.
- Parental leave and related benefits
- Annual vacation.
- Personal/leave, carer’s compassionate leave and unpaid family/domestic violence leave are all options.
- Leave for community service.
- Long-term service leave.
- Public holidays.
- Termination notice and redundancy pay
A Modern Award is a document that, in addition to NES, lays forth the minimal terms and circumstances of employment. This took effect on January 1st, 2010.
Modern awards are available to all employees and businesses covered by the national workplace relations system.
If your company is audited, these records must be easily available, readable, and written in English for a Fair Work Inspector. Paystubs, employment agreements, rosters, and timesheets are all examples of this.
It goes without saying that records can’t be modified unless they’re being updated to correct an error, and they can’t be changed in a way that’s untrue or deceptive.
STP (Single Touch Payroll) is an Australian government project aimed at making it easier for companies to submit to government agencies.
Employers transmit payroll information to the ATO using STP every time they pay employees using STP-enabled software. Payroll data includes the following
- Wages and salaries
- Withholding on a pay-as-you-go (PAYG) basis.
- Superannuation
Payroll tax is a self-assessed general-purpose state and territory tax levied on wages paid to employees by their employers. When an employer’s overall wage bill surpasses a certain threshold, this occurs.
When your total wage bill exceeds the state or territory’s threshold amount, you’ll have to pay a portion of it as payroll tax.
How do I get compliant?
In order to implement an effective compliance plan, the first step should always be to assess your company for compliance issues. After you’ve discovered which regions have non-compliance issues, you’ll need to figure out what’s causing them. Consider the following questions:
- What are the primary dangers?
- What is the source of the problems?
- What are the procedures that aren’t described and rely on memory?
- Where do we need a new risk-reduction solution the most?
After you’ve addressed the underlying causes of non-compliance, it’s time to look at what options are accessible to you.
If you want to run an internal payroll compliance audit, you’ll need someone who is familiar with all current awards and agreements and is an Excel master. Regardless of experience, this is still a very manual project, and the results are always strongly reliant on the individual’s talents and precision.
Best Australian payroll compliance solutions
Adding proper cloud payroll software to your business requirements, as well as automating payroll compliance, may alter the way you work. Business owners can quickly obtain accurate records with a few mouse clicks. This not only ensures that businesses are ready to submit critical data but also gives them peace of mind that they are adhering to all payroll rules.
If you are interested, you have DHRP offering the best Microsoft Dynamics payroll solution – custom to your business needs.
Get the right solution in Dynamics 365 with DHRP
Dynamics 365 is a complete package along with the payroll solution. From employee self-service to the global and Australian payroll legislation, everything is automated. You have the payroll compliance checklist Australia, now get in touch with us to have your solution right away. Our experts are always available to answer your queries about payroll management and workforce management. Let’s Connect!
