Australian businesses are being urged to take stock of a number of payroll changes set to come into force in 2020, including tougher rules on superannuation and record keeping.
According to the Australian Payroll Association, there are several changes to modern awards and other payroll-related legislation of particular concern to employers that will take effect in the early part of 2020.
“The most significant change will come into effect on 1 March 2020, when we see the introduction of important new practices for payroll aimed at reducing wage theft and non-compliance with awards,” the association’s CEO, Tracy Angwin, said.
“Up until now, employers have been able to rely on a system of trust with their employees. The new annualised salary clauses in some modern awards, which will require more stringent record keeping and overtime control measures, will completely change that.”
Ms Angwin said that from 1 March, employers will be required to notify workers in writing of both their annualised salary and maximum ordinary working hours beyond the baseline 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,” she said.
“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.”
Other key changes impacting payroll in the new year, Ms Angwin said, are:
Super to be paid on gross pay
Employers will be required, from 1 January 2020, to calculate and payer superannuation based on the employee’s gross rate of pay — including on any salary sacrificing.
“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.
“This is one of two superannuation guarantee (SG) changes that will affect employees who employ on a salary sacrifice arrangement from January 2020 onwards.”
The other will be the end of being able to use salary sacrificing to make up part or all of compulsory super contributions.
“I recommend that employees review all salary sacrifice arrangements for impacts for compliance with the new law,” Ms Angwin said.
Tougher record-keeping, overtime requirements
According to Ms Angwin, another change of concern relates to record keeping around employee work hours and break times.
All start, finish and break times will need to be recorded and signed by employees, and any hours beyond each roster or pay cycle will attract overtime rates if the employee’s annualised salary does not meet the minimum wage for total hours worked.
“My biggest concern is the practicality of the new model clauses, and how these will impact the culture of employers,” Ms 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.”
Self-correction of unpaid super
Ms Angwin noted that the SG amnesty was recently approved by the lower house of Parliament in November and is “likely to be passed” in the Senate.
She said the bill will grant employers “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”.
Harsher penalties for non-payment, at up to 200 per cent of the amount owed, will then be applied once the amnesty expires.
“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.