If you’re a small business that also employs people, it is important to pay your employees correctly. With the volume of information out there, it can often times be daunting to get things right.
In this week’s episode, we explore the three most common errors for small business.
Common errors made by small business when paying their employees are:
- Poor compliance and paying the incorrect award
- Pay scales not being updated
- Junior Staff
1. Poor compliance and paying the incorrect award
Being an employer is already daunting for many small business owners. Navigating the compliance is often times left to the last minute or after the employee has started working with you for a few weeks.
Basic requirements for employment are:
a) Workers compensation insurance
This is now being run via the NSW government website www.iCare.nsw.gov.au where you can get a quote and enact your insurance policy online.
b) Employment Contract
This outlines the terms of engagement between you the employer and the employee. Fair Work Australia have templates available for use that comply with the basic requirements.
c) Understanding the Relevant Award
This is the tricky part. Some small businesses actually have multiple awards in operation at the same time. An Award is determined by the type and function of the work performed by the employee.
Say for instance you have a small bed and breakfast who hires a cook, wait person and bookkeeper / admin assistant. The cook and wait staff will be covered by the Hospitality Award, whilst the bookkeeper and admin assistant would be covered by the Clerk Award.
2. Pay Scales not updated
Every Award has a published pay scale that is updated at least once per year. It is the responsibility of you, the payer to ensure you are paying the correct award wage.
Beware – some awards are actually reviewed twice per year, resulting in pay increases effective from 1st January and 1st July each year that you need to comply with. The updates are usually published on the 28th of the month preceding the amendment (so, the 28th June for the 1st July).
3. Junior Staff
Junior staff in most Awards have a different pay scale to Adults. Many small business owners forget to review and update Junior Staff rates after their birthday. We recommend an annual calendar reminder so that you never forget this process.
Again, the Fair Work website will have information about junior staff rates relevant for your Award.
Fair Work Australia website www.fairworkaustralia.gov.au
BEWARE! A google search sometimes displays a commercial organisation with what looks to be a very similar website and they request payment for their advice.
The government website will never request payment for their services.
Still need advice tailored to your circumstance?
Ask your advisor – either your Tax Agent or BAS Agent should be able to help you decipher the rules relevant to your business and in the interim help set up your files / systems so that you’re covered.
If you don’t have an Advisor, please, book a 15 minute phone call with yours truly on this link.
If this blog was useful to you, perhaps the following blogs will also be of help:
- 12 months of casual employees
- 51,000 reasons to care when contractor becomes your employee
- Changes to super guarantee
As always, please forward and share on social media so that we can help more people like you Make More Possible!