OBLIGATIONS TO EMPLOY STAFF

There are some important things to put in place before and during the employment of staff in your business.  Ignoring any of these obligations can be costly and detrimental to your business operations.  Because the compliance with employing staff is quite involved, commonly the more complex business structures that offer risk protection are more desirable.  However, all of these regulations apply to you if you are an employee of your own company or trust. 

Main Obligations 

• Keeping employment records & TFN Declarations
• Awards and Employment contracts
• Superannuation Guarantee
• Withholding Tax
• Workers Compensation
• Reporting requirements 

Keeping employment records and TFN declarations

For general options regarding keeping records for you business, please read our record keeping fact page.  In terms of records for employees, you need to consider time sheets, pay slips and keeping records for all of the other employment obligations mentioned in this fact sheet.  Failure to do so may prove costly, and may be the subject of ATO enquiry.  Furthermore, keeping up to date records ensures you can meet your time line obligations for super and reporting requirements. The first important record to keep for employees is a TFN (Tax File Number) declaration.  You can get copies of this form from your newsagent.  You need to complete one of these for every employee you have, send the original to the ATO, and keep a copy yourself.  You can be fined for not completing this obligation. 

Awards and employment contracts 

As the industrial relations laws are now in change, you need to keep abreast of the working conditions you are meant to provide for your employees.  Visit your states department of training website, or contact them for the latest information on these conditions for your business industry. Besides any award or conditions you have to honor, it is highly recommended that you have a formal employment contract in place outlining rate of pay, hours of work, and expectations of both the employee and employer.  This is a case of prevention rather than cure in case you have a disagreement with your employee. 

Superannuation Guarantee

Arguably the most complex and constantly changing area of employment, superannuation guarantee is required for most employees, except those under 17, over 71, or who earn less than $450 gross per month.  The most important issues with superannuation guarantee for employers is ensuring that you provide choice of superfund to your employees (effective 1st July 2005), and that you pay the correct amount, on time every quarter. 

Failure to pay your super on time every quarter renders it non tax deductible to you, and subject to fines and penalties.  Furthermore the paperwork and regulations on late payment of super are lengthy and costly and therefore recommended to be avoided altogether.  The due date for payment of your employees’ super every quarter is strictly the 28th of the month following the quarter. If you have any employees on a set salary or wage, we recommend setting up a direct debit monthly to ensure the correct amount of super is always paid on time. 

Withholding Tax

You need to withhold tax from payments to employees, including to yourself if you are a company director.  There are limited exclusions to withholding tax, and you can be penalized and fined for not doing so.  Using an accounting software program can calculate the correct withholding tax for your employees’ pay based on hourly rates or a set wage for you.  Alternatively, you can calculate it manually using PAYG withholding tax tables. 

The withholding tax amount can be varied if your employee has HELP debt (formerly HECS), SATO (Senior Australian tax offset), CSA debts (Child Support Agency), or if they are not claiming the tax free threshold, or if there withholding % is varied for certain deductions.  There are special tables for all these situations.  You pay your employee directly their wage less the withholding tax, and the withholding tax amount is remitted to the ATO on a monthly or quarterly activity statement, with your GST if you are registered. 

Workers Compensation

Workers compensation is a type of insurance to cover your employees should they be injured during employment.  It is important to note that company directors, although they are employees, are not covered by this insurance.  It is compulsory that your employees are cover by workers compensation, or an approved insurance cover.  For more details for Queensland employers, please visit: www.business.gov.au - workers compensation requirements   

Reporting Requirements

Other reporting requirements for the ATO not already mentioned, includes providing your employees with payment summaries (group certificates) and lodging your annual PAYG payment summary statement. You generally need to prepare your payment summaries for employees and provide a copy to them by the 14th July following any financial year.  You then need to prepare and send the originals of those payment summaries with a PAYG payment summary statement to the ATO by 18th August following any financial year.  There are concessions to these dates if all your employees are family members.  Again you can be fined for not lodging these statements on time. The ATO also provides a good guide on some of these topics at http://www.ato.gov.au/businesses/pathway.asp?pc=001/003/079

For more details on specific employment requirements for your business, please email This e-mail address is being protected from spambots. You need JavaScript enabled to view it or arrange an appointment.  

^{This fact sheet is provided as general advice and does not cover every possible situation and related consequence.  Further investigation should be done in relation to your own particular circumstances with an appropriate professional, and hence Dtax Accountants accepts no liability for actions carried out that rely on the information provided in this fact sheet.}