Hiring a new employee is an important decision for your business. Use this guide to make sure everything is ready for a best practice and compliant working relationship.
Before you enter into a work agreement or contract with someone:
- Confirm they are legally allowed to work in Australia
- Decide whether they will be an employee or contractor – it affects tax, super and other employment conditions
- Know the law – National Employment Standards (NES), awards and agreements
- Ensure you are meeting your workplace health and safety obligations and have registered for workcover insurance
- Set up a system to manage payments and keep records of your workers.
- Check if you need to register for pay as you go (PAYG) withholding from your employees’ wages, or from payments to contractors
- Check if you need to register for payroll tax with your state or territory revenue office. You’ll only need to do this if your total payments to employees and certain contractors exceed the threshold in your state or territory.
- Register for fringe benefits tax (FBT) if you’re providing fringe benefits to your employees or their associates in respect of their employment with you.
Now that you have been successful in finding someone suitable:
- Provide an offer of employment or contractor agreement outlining applicable terms and conditions
- Ask your employee to complete a Tax file number (TFN) declaration and Superannuation Standard Choice form.
- Provide your employee with a Fair Work Information Statement
- Start keeping records about employees and contractors. You’ll need these to meet your tax and super obligations
- If you’ll be providing fringe benefits to your employee or their associates you should be registered for fringe benefits tax (FBT).
- If you’re entering into a salary sacrifice arrangement with your employee, make sure the arrangement is agreed by both parties and preferably documented. You may be liable for FBT on the fringe benefits provided as part of the arrangement
Now they have commenced working:
- Carry out an induction to assist the individual in settling in quicker
- Each pay period give the employee a payslip showing the amount paid and the amount withheld (using the tax withheld calculator or tax tables online)
- Each quarter work out how much super to pay for each employee
- Each year provide a payment summary or income statement to each employee showing the amounts paid and withheld including any fringe benefits
- Keep records of all of the above.
The following may also apply for some employees:
- If your employee acquires a Higher Education Loan Program (HELP), Student Start-up Loan (SSL),Trade Support Loan (TSL) or Financial Supplement from the Australian government after they start working for you, they must tell you by completing a withholding declaration because it might affect the amount you withhold.
- Services Australia may ask you to deduct child support payments from an employee’s pay
You will have other obligations when employing people including preventing unlawful discrimination in your workplace and supporting working parents, people with a disability and those with carers responsibilities.
When someone leaves:
- Process the final pay and calculate amounts to withhold depending on if employment termination payment (ETP) are applicable.
- Work out how much super to pay as normal and pay the final contribution by the usual due date (28 days after the end of the quarter).
- Keep records of all of the above. Keep your former employee’s TFN declaration for the current and next financial year.
- Ensure the reason and manner your employee leaves complies with anti-discrimination laws.
Contact Small Business Society today for more hiring information and assistance with your recruitment program.
The information provided in this document is for your guidance only and is general in nature. It does not constitute as legal advice. It is the responsibility of the individual to seek legal advice where required.
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About Kate Tongue
Kate Tongue is the founding Director of Small Business Society.
She is a qualified and experienced Human Resources professional with more than 10 years of experience across the private and public sectors.
Her particular interest and experience is in managing the employee life cycle, delivering process improvements, and Human Resource strategy.
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