The passing of the new year welcomed Australia into a fresh decade, and while many of us are still suffering the throes of the party season, industry regulators are already outlining their goals for 2020. Following last year’s disastrous run of form, the Fair Work Ombudsman has put employee award compliance under the microscope, and business owners must be prepared.
To stay protected in 2020, franchisees and small business operators are being encouraged to look over their current practices, as well as familiarise themselves with the suite of upcoming employee award changes.
Tracy Angwin, CEO of the Australian Payroll Association said that the breath of failures reported in 2019 highlighted just how difficult the employee award system can be.
“Legislation and individual awards around employee entitlements change regularly. Organisations are required to comply with Federal, State-based, and award-based legislation together, making it one of most complex and legislated areas of business administration,” she said.
We spoke we Angwin as she shared the top six changes to legislation and employee award standards to watch out for in 2020.
1. Super updates
From 1 January 2020, employers are now required to pay super on an employee’s gross rate of pay, including on any salary they have sacrificed.
Angwin said it was critical that franchisees who employ several workers ensure they are across all employees’ contractual arrangements.
“It will no longer be possible for an employer to pay super only on the reduced salary of an employee with a salary sacrifice agreement,” she said.
“This is one of two superannuation guarantee (SG) changes that will affect employees who employ on a salary sacrifice arrangement from January 2020 onwards.”
2. Salary sacrificing contributions
The second component of the superannuation guarantee outlines that salary sacrifice cannot contribute to mandatory super contributions.
January 1 marked the end of employers utilising a salary sacrifice to make up all, or part, of their compulsory SG contributions. It ensures that any proportion of an employee’s salary that is ‘salary sacrificed’ cannot be put into a super fund as part of the mandatory 9.5 per cent in super contributions that should be contributed by the employer.
“I recommend that employees review all salary sacrifice arrangements for impacts for compliance with the new law,” Tracy said.
3. Working hours update
In March, the employee award system is set for a mass-overhaul with regard to working hours. From March 1, employers will need to notify employees in writing of their annualised salary and their maximum ordinary working hours outside the 38-hour week.
“Under 22 modern awards, if an employee works any hours in excess of a 38-hour working week, the employer must ensure that they don’t earn below the minimum wage overall,” Angwin revealed.
“This forms the first part of the Fair Work Commission’s recent decision to change annualised salary provisions under 22 modern awards from March 2020 onwards.”
4. More consistent record-keeping
In response to cases such as CouriersPlease, record-keeping in relation to break, start and finishing times is also set to become a focus in 2020. Under the new employee award rules, employers must keep records of the start finish and break times of all workers, to ensure no excess hours are worked outside of overtime stipulations.
Records must also be signed, or acknowledged as correct, by employees for each roster or pay cycle.
“My biggest concern is the practicality of the new model clauses, and how these will impact the culture of employers,” Angwin said.
“They may feel they are being micro-managed, and this runs the risk of eroding the trust around overtime working hours that has been established between employers and their staff.”
5. Overtime
Also coming 1 March, employers will be required to pay employees for overtime worked if their salary doesn’t cover it.
If an employer finds that a worker’s received less pay on their annualised wage agreement than if they were paid under the award, they must pay the difference.
Any shortfalls must be paid to them within 14 days. This process needs to occur every 12 months, even upon the termination of a contract.
6. Superannuation guarantee amnesty
In November, the superannuation guarantee amnesty passed the House of Representatives and has now passed on to the Senate. Angwin said it is likely to be passed, providing a one-off amnesty for employers to self-correct any unpaid super contributions, and will grant employers six months from the date of royal assent to come clean to the Australian Taxation Office.
“Those who have failed to come clean on unpaid superannuation should act on this sooner, rather than later. This will give them more time to maximise the opportunity and navigate any unseen complexities,” she said.
2020 employee award changes
Whether you are a franchisor or franchisee, understanding your requirements under the strict employee award system is critical to ensuring compliance.
Don’t let your business fall foul to the emerging wage theft and underpayment trend.
“It is crucial that businesses hire a qualified payroll professional, or an external managed payroll service provider, who can keep abreast of the upcoming changes in government legislation and employee awards,” Angwin said.