Three issues some employers get wrong, have not planned for, or continue to create legal exposure.

Single Touch Payroll

Single Touch Payroll (STP) is a method of reporting tax and superannuation information to the ATO. The legislative scheme requires employers to report payroll information, such as salaries and wages, pay as you go (PAYG) withholding and superannuation information to the ATO each time you pay them.

Using STP, an organisation’s payroll or accounting software sends employee tax and super information directly to the ATO – streamlining the process of reporting. Employers need to ensure current payroll software is updated to offer STP reporting, or choose payroll software that is STP-enabled. The requirements and commencement can vary depending upon the size of the business:

Small employers, with 19 or less employees, need to commence reporting before 30 September, 2019.
Micro-employers with less than four employees are required to report, but have additional options including using low cost or no cost products, or quarterly reporting through their registered tax or BAS agent. This option will be available until 30 June, 2021.
Large employers with 20 or more employees should already be reporting since 1 April 2018.

Employers in remote areas or with poor internet coverage may apply to the ATO for an exemption from such reporting requirements. If you haven’t already sorted this issue, or have queries, you should speak with your payroll company, bookkeeper, accountant or the ATO.

Terminating an employee on workers’ compensation

Perhaps the trickiest of all matters to deal with as an employer is if you must terminate an employee who is on workers’ compensation.

The current “soup” of state and territory-based workers’ compensation laws and the application of the federal workplace relations system can be overwhelming.

I am not surprised when a client tells me their employee has been on workers’ compensation for several years and they have not sought to deal with the issue. At times it is easier to put off.

Conversely, we also see employers throwing caution to the wind and terminating employees who are in receipt of workers’ compensation, without a planned and methodical approach.

This too can be the result of how much frustration is incurred for employers when employees are on lengthy period of absence for workers compensation.

After you have observed the relevant protected periods and the requirements for rehabilitation and return to work, you may decide that it is in the best interest of the business, or you may have no other option, but to terminate the worker’s employment.

If you choose to do that, the employee might decide to file an unfair dismissal application or an adverse action claim or similar. To avoid this occurring, or to at least minimise your exposure to such claims, you need to have a plan and should not decide until you have all the latest medical facts in front of you.

Stay the course, seek advice and if you must decide to terminate such an employee’s employment, make sure you are aware of potential liabilities, the federal, state and or territory specific laws that apply.

Superannuation on overtime

It is the generally accepted view that overtime related wages do not attract superannuation. Those hours and the particular pay for the overtime are not considered ‘ordinary time earnings’.

Such a view is based on an application of the ATO’s superannuation guarantee ruling. However, what happens if those overtime hours are performed on such a regular and systematic basis that they might be viewed as ordinary hours?

A recent decision of the full bench of the Federal Court highlights the issue of clarifying what are ‘ordinary hours’ for the purposes of making superannuation contributions.

From a workplace relations perspective, the general principle established by the Federal Court is that ‘ordinary hours’ means the ordinary hours that are set out in the relevant award or agreement. This is consistent with the ATO’s view.

However, applying this principle may depend on the specific facts of the case. In that recent case it was fortunate for the employer that they had expressly set out that its annualised salaries were calculated on ‘base salary’ and ‘overtime’ components.

When drafting contracts remember that to be specific is terrific. Make your intentions clear inwriting.

This first appeared in the September/October issue of INCLEAN magazine

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