Hiring employees is an exciting milestone for any business, but it also comes with responsibilities. Whether you’re bringing on your first staff member or expanding your existing team, understanding your obligations as an employer is essential. Failing to meet these requirements can lead to penalties, workplace disputes, or even damage to your reputation. Here, we’ll cover key considerations, from employment contracts to employee entitlements, to help ensure you’re on the right track.
Are Employment Contracts Mandatory?
While not legally mandatory, written employment contracts are strongly recommended. A clear, well-drafted contract protects both you and your employees by outlining the terms and conditions of employment. It should include:
- Job title and duties
- Hours of work
- Pay rate and any entitlements
- Notice periods for termination
- Confidentiality and non-compete clauses, if applicable
Even in the absence of a written contract, employees are still covered by the National Employment Standards (NES) and applicable awards or enterprise agreements. A verbal agreement leaves room for misunderstandings, so a written contract is the best way to establish clear expectations.
Understanding Awards and Pay Rates
Australia’s workplace relations system is underpinned by awards, which are legally binding documents outlining minimum pay rates and conditions for specific industries or job types. To ensure compliance:
- Identify the relevant award: Check the Fair Work Ombudsman‘s website to find the award that applies to your business and the role you are hiring for.
- Determine the correct pay rate: Pay rates vary depending on the employee’s classification under the award. Ensure you’re meeting the minimum wage requirements.
- Include penalty rates and allowances: Many awards specify higher rates for overtime, weekend work, or public holidays, as well as allowances for tools, uniforms, or travel.
Failing to pay your employees correctly can result in back payment, fines and damaged trust within your team.
Accruing Leave Entitlements
Under the NES, employees are entitled to certain leave types, which can accrue over time:
- Annual Leave: Full-time and part-time employees earn 4 weeks of annual leave per year, based on their ordinary hours of work.
- Personal/Carer’s Leave: Employees accrue 10 days of personal leave per year to cover sick leave or caring responsibilities.
- Long Service Leave: Entitlements vary between states, but most employees become eligible after 7-10 years of service.
- Parental Leave: Eligible employees are entitled to 12 months of unpaid parental leave, with the option to request an additional 12 months.
Casual employees typically receive a higher hourly rate, known as casual loading, in lieu of leave entitlements.
Allowances and Reimbursements
In addition to wages, you may need to provide allowances or reimbursements. Common examples include:
- Uniform or tool allowances: If employees are required to wear a uniform or use specific tools, the cost is often covered by the employer.
- Travel reimbursement: If employees are required to use their personal vehicle for work purposes, you may need to pay a mileage allowance.
- Meal allowances: Employees working overtime may be entitled to a meal allowance.
The applicable award or enterprise agreement will detail these obligations, so it’s important to familiarise yourself with the specifics.
Superannuation Contributions
As an employer, you are required to pay superannuation for eligible employees, even casual staff. The current superannuation guarantee rate is 11.5% of an employee’s ordinary time earnings, but this rate is scheduled to increase over the coming years. Ensure you pay contributions on time to avoid penalties and maintain compliance.
Record-Keeping Obligations
Employers must keep accurate records for all employees, including:
- Payslips and time worked
- Tax file number (TFN) declarations
- Leave balances and entitlements
- Superannuation contributions
These records must be kept for a minimum of 7 years and be readily accessible if required by the Fair Work Ombudsman or the Australian Taxation Office (ATO).
Stay Compliant and Seek Expert Advice
Navigating the complexities of employment obligations can be challenging, especially as laws and regulations evolve. Staying compliant protects your business and fosters a positive workplace culture. If you’re unsure about your responsibilities or need guidance, Hervey Bay Tax Solutions is here to help. Our team of experts can assist with payroll, superannuation, and tax compliance, giving you peace of mind as you grow your team.
Contact us today to discuss how we can support your business as you take this exciting next step!