With Australia now opening back up after the COVID restrictions, unemployment is tipped to fall to the lowest rate in just over 50 years –
down to under 4%. If over the coming period you hire new staff, there are certain steps you should follow to cover off on your tax,
workplace, and superannuation obligations.
Australian citizens, permanent residents and New Zealand citizens are legally permitted to work in Australia. If the worker does not fall
into these categories, you must before employing them, confirm they have a visa granting them permission to work here. For more
information, visit the Department of Home Affairs website https://immi.homeaffairs.gov.au/visas
Establish the nature of the engagement – is the worker an employee or contractor? This matters from a tax perspective because employers
will have PAYG withholding obligations to employees. By contrast, no PAYG withholding obligations are owed to contractors unless there is a
PAYG voluntary withholding agreement in place. You and a contract worker (payee) can enter into a voluntary agreement to withhold an amount
of tax from each payment you make to them. This is a good way to help independent contractors meet their tax obligations. A voluntary
agreement can cover a specific task or apply to successive arrangements between you and the worker. Either you or the contractor can end a
voluntary agreement at any time by notifying the other in writing.
The employee/contractor distinction also matters for superannuation purposes. Employees are generally entitled to superannuation. From 1 July 2022, this also includes employees who earn less than $450 per month. On the other hand, contractors are not entitled to superannuation unless they work under a contract that is wholly or principally for their labour.
While in many cases, the status of a worker may be clear cut, if as an employer you are in any doubt about the character of the relationship, then you are encouraged by the ATO to use their Employee Contractor Decision Tool. The tool asks the user a series of questions, and then reaches as a result depending on the answers provided. Print out the result and keep it on file. If you need further guidance or disagree with the result, speak to your accountant.
Before commencing employment, employees should complete the following forms:
If you now take on a new employee and they don’t choose a super fund, employers will have an extra step to take to comply with the choice
of fund rules. That is, employers may need to request an employee’s ‘stapled super fund’ details from the ATO. A stapled super fund is an
existing super account linked, or ‘stapled’, to an individual employee so it follows them as they change jobs. This aims to reduce account
fees. Employers can request stapled super fund details from the ATO using ATO online services.
An employee’s minimum wages, including penalty rates, overtime rates, and allowances will in most cases be set out in the relevant
workplace Award. Additionally, some employees have special minimum wages rates in their Award, for instance juniors, apprentices, and
trainees. Contact Fair Work Australia on 13 13 94 if you are in any doubt about the applicable rates. On the Fair Work front, employers are
also generally required to provide new employees with a Fair Work Information Statement.
Other issues may be in play when you take on a new employee, such a workers’ compensation coverage.
If you have any questions, please reach out to your local Forsyths office on 1300 447 007.