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Share your experience with taking on employees - What can we do to make it easier for small businesses?

over 1 year ago
This discussion has concluded. Thank you for participating in this forum. If you would like to participate in a future Small Business Fix-it Squad or other consultation activities, please join our Small Business Consultation Panel: www.ato.gov.au/jointhepanel

Scenario

Joe needs to take someone on to help out in his business.  He is overwhelmed by the decisions that need to be made and the various government agencies he has to deal with. He needs answers to many questions, including:

  • Do they have a right to work in Australia?
  • Do I have to withhold PAYG?
  • Do I need to pay super contributions? 
  • Do I need to take out WorkCover insurance? 
  • What are my work health and safety obligations
  • What award, rates and leave entitlements apply? 
  • What else do I need to do?

Focus question
Share your experience with taking on employees - What can we do to make it easier for small businesses?

farmgate1 over 1 year ago
In response to the above scenario, the main problem I have had is which Award to use. Being a small business our jobs to do not fit neatly into awards. I also had trouble in knowing when an employees HECs/Help Loans were repaid. Extra dollars were withheld from the employee due to this.
Tiffany Waters, ATO over 1 year ago
Thank you for taking time out from running your small business to participate in this forum.

We have documented the insights and ideas you’ve shared, and will provide this to the upcoming Small Business Fix-it Squad, who will meet on 14th and 15th of April to discuss ‘Taking on an employee – making decisions and reducing red tape‘. The squad is made up of small business owners and representatives from relevant federal and state government agencies. As a team, they will work through the problems and identify fix-it concepts. From here, we will validate these concepts with other small business owners and make any refinements necessary. We aim to finalise our fix-it concepts by 30 June.

As this forum will now be archived, we will email all contributors after 30 June, to let you know about any fix-it concepts that are being progressed or have been implemented.

If you would like to participate in a future Small Business Fix-it Squad or other consultation activities, please join our Small Business Consultation Panel: www.ato.gov.au/jointhepanel
tt over 1 year ago
The awards are very difficult to read and some things are not included or explained, like if you have to pay leave loading on long service leave.
I rang Fairwork, they checked the award, could not advice me, told me to ring Industrial relations(or something Industrial), now I am really busy do not have time to sit on the phone the whole day, could not find any answers to this question on line, so where do you actually get this answers???
Louise Peters, Fair Work Ombudsman over 1 year ago
It sounds like your employee’s long service leave entitlement comes from the long service leave laws in your state.

Generally long service leave is paid at an employee’s ordinary rate of pay however, you’ll need to double check with the relevant body in your state or territory. You can find the website and contact details for your state industrial relations body here: http://www.fairwork.gov.au/leave/long-service-leave
Umar over 1 year ago
I found the idea of a SB Fix it Squad intresting...is there now a specific team in the ATO thats trying to fix the major pain points for small businesses? If so, would love to know their current focus

Umar Batchelor CA from http://www.bizify.com.au
Tiffany Waters, ATO over 1 year ago
Hi Umar,

The Small Business Fix-it Squad is a cross agency initiative. The ATO is leading the initiative and we engage representatives from the federal, state and local government agencies that business would need to interact with on the specific topic we explore. We also invite small business owners to join us in the squad.

Last year we examined two topics:
1. Selling or Closing a business and
2. Restructuring from a sole trader to a small proprietary limited company.

We have implemented several recommendations, most recently we released a cross-agency webcast to support businesses find out all about selling or closing, which you can access at: https://www.youtube.com/playlist?list=PL5-ESUNqws-Owwkg7EoQcVcC3DSRJDbAW

We encourage small businesses interested in participating in a fix-it squad or other consultation activities to register on our small business consultation panel: www.ato.gov.au/jointhepanel.
fedup over 1 year ago
There will be no small businesses left in security until you people get off your seats and start implementing your own 'no pay disadvantage' rules and conditions. Who was the idiot at fair work that approved the Collective Agreements where a guard is offered the following rates of pay: Mon-Fri 0600 to 0600 $19.91 , Sat $23.38, Sun $23.38 on a Full time/Part time roster.

I would like also to be informed how those much wiser than I, can figure that Annual wage increases offered in these Agreements take place in February the following year when the award is varied on July 1 the previous year and is always much larger then the 1.5% that Southern Cross has in their contract. This makes staff and small companies worse off by 7 months on the award wage increase.

Please explain in plain English how is this offer is better for staff and complies with Your statement "You cannot be forced to sign a contract however If you CHOOSE to enter into a contract you MUST be better off overall".

As far as I can see you people are presiding over a system that will see the end of all small business in this field. The words Fair Work Australia is a furphy and is fair only to those in control of the larger companies that benefit.


The contract that was implemented at a Centre in Surfers Paradise today breaks all your rules about fairness. The employees at the Centre were given no choice - they either signed the contract or were given no offers of work. 'THIS IS REALLY FAIR FOR EMPLOYEES'.

The people who oversee these agreements need to do some compliance inspections before there no small companies left.

You can reply or contact me at any time.
CQB over 1 year ago
Employment is certainly a minefield and the comments below are varied and complex. I agree that a checklist for new employers would be incredibly helpful. This is the kind of thing we set up for our clients but new employers don't necessarily have a support backup set up - bookkeeper, accountant, etc. The online presentation of Fair Work is definitely the most navigable set up I've seen so far and the help line, while always busy, is extremely helpful. I agree however, if you speak to two different consultants you are likely to receive two different answers. Of course whether the payroll is complex or not depends greatly upon the industry. No matter how experienced you are reading an award is a bit like wading through treacle with all the legal jargon. Given that giving advice on awards falls outside our scope we have taken to referring those clients with really complicated setups to payroll specialists for advice. I doubt its possible to simplify the whole award process but this would be an amazing step - to create a simplified version of each to make the job easier for employers. This is pretty much what the industry groups who provide payroll information to their members offer - The Pharmacy Guild for example. It makes it all much easier for these employers.
lavabode over 1 year ago
Everything is separate, no online form for TFN dec, a checklist form would really help. I
found it very difficult to navigate Super payments, not calculating them, just actually paying them through the clearing house.
Tiffany Waters, ATO over 1 year ago
Hi Lavabode, thank you for this feedback. Was it the ATO's Small Business Superannuation Clearing House you were finding difficult to navigate? Are you able to provide some examples of what issues you experienced?
TroyW over 1 year ago
I think the biggest struggle for small business is how complex the Awards are. First they need to identify the correct award- not as easy as it would seem as often there are a few similar awards that could be considered appropriate. Then they must read the massive document and try and identify what level the employee should be at, what special loadings apply, what hours can be worked at what rates, etc. It is a complicated process - it feels like you need to be a lawyer to read some of those awards - and I have seen many employers just throw up their hands in frustration and make a 'best guess' about the pay rate- not a good result for anyone. Streamlining the awards so that there is just one per industry, and making them simpler to understand for a layperson would go a long way towards helping small businesses to employ people. Perhaps the most complex award is the building and construction award, but those business owners at the least patient when it comes to reading documentation - not a good combination.
Tiffany Waters, ATO over 1 year ago
Thanks Troy.
BrendaM over 1 year ago
After reading the comments I can see from both sides of the fence. I am a small business owner and a BAS Agent. My work involves helping small business navigate through the many different fields associated with running a business with hiring employees being the most timely.
In my opinion to ensure small business is covering all areas required for compliance i do like the idea of a wizard or checklist. For me it helps clarify where I'm up to.
Have I sent off the TFN declaration? Am I taking to write amount of tax out of their pay?
Adding things into the checklist like; OTE for super - knowing how to find that out.

And having simple & clear information about your rights as an employer, I think will help the small business owner feel more confident about the decisions they make when employing staff. The ability to find this information, even in summary only, in one place would be a huge advantage. It can get quite stressful when sourcing information is a long winded process. Business owners need to know that what they are doing is correct and compliant.
Tiffany Waters, ATO over 1 year ago
Thanks Brenda, great to hear your thoughts and explanations on how these suggestions will help small business owners.
TinaS over 1 year ago
I think your first employee is the hardest. You might not be ready for a full time employee, it might be an industry that it hard to get casuals. Part time can be quite inflexible. It would be nice to have a situation where you will guarantee say 20 hours per week with the ability to have more. I agree it is very frustrating to get different answers from different experts. I believe a lot of employers end up making their own rules as it is too hard to work out what the real rules are. There is also confusion about notice on resignation. If someone resigns and doesnt give notice, what are the employers options. once again an answer that changes depending on who you ask.
veronica.yoong over 1 year ago
If an employee accummulated a huge amount of annual leave and could not take it, the employer is forced into allowing the employee to do a cash out. When the cash out happens, should leave loading be paid for the cash out annual leave?
Allan @ Hansens over 1 year ago
It depends!
Leave loading is money paid to an employee on top of their normal pay, to compensate them for expenses during annual leave. You will only have to pay leave loading if it is outlined in your employee’s award or workplace agreement. Visit the Fair Work Commission site for more information on awards and workplace agreements.
Louise Peters, Fair Work Ombudsman over 1 year ago
Hi Veronica,

When an employee cashes out annual leave, they should be the paid same as what they would have got if they took the leave. This means that if you’re required to pay annual leave loading by your award or enterprise agreement, you need to pay leave loading when cashing out annual leave.

You can find more information about cashing out leave on the Fair Work Ombudsman’s: http://www.fairwork.gov.au/leave/annual-leave/cashing-out-annual-leave
KarenF over 1 year ago
Does super have to be paid if leave is cashed out?
Tiffany Waters, ATO over 1 year ago
Hi Karen,
Superannuation is calculated on ordinary time earnings. Specifically excluded from the definition of Ordinary Time Earnings on termination of employment is:

• a payment in lieu of unused sick leave; or

• an unused annual leave payment or unused long service leave payment within the meaning of the Income Tax Assessment Act 1997 .

Therefore super is not payable on a cash out of annual leave on termination of employment. However, if a payment was being made for unused leave in arrears and is not part of a termination of employment, then it is considered ordinary earnings and therefore superannuation is payable. For more information you can refer to Superannuation Guarantee Ruling 2009/2:
http://law.ato.gov.au/atolaw/view.htm?Docid=SGR/SGR20092/NAT/ATO/00001
KarenF over 1 year ago
Thanks Tiffany. I had not read clause 36. That states it specifically.
KarenF over 1 year ago
Sometimes a small business can join an industry association which can assist with some of these questions, such as a Chambers of Commerce, Building Industry Associations, Retail Traders Associations, etc. Sometimes these provide access to IR advice as well. If your business can align with a particular industry that can also help with deciding which Award should be used.
msize over 1 year ago
I think a checklist would be the ideal option with each of those questions listed and necessary forms detailed eg Tax Declaration Form, Super Choice Form. List where they go to get the information.
stuart1064 over 1 year ago
This a very question that has many layers of complexity. The question is more about getting to answer them. For example trying ringing Fairwork twice and ask the same question.
I was first caller last week and they took an hour to answer. I got a good anwser.
Workcover are pretty impossible to deal with.
The ATO, Fairwork and Workcover all have different definitions for employee and what is classified as a small business.
The Modern Award system is quite good and clear about most things.
I would be happy to discuss further.
Tiffany Waters, ATO over 1 year ago
Thanks Stuart,

These are great insights and I've noted them for the squad. Just following up on your comment about the different classifications of small business across agencies, what impact is this having for small business owners?
DoyleS over 1 year ago
I'm in this position at the moment and I agree with stuart1064's views.

Everyone you contact, including my accountant, has a different perspective and you're given a variety of answers to a simple question. I don't know if this is overly simplistic, but I find the "wizard" on the licensing portal really helpful. Could something like that be setup so that you can add your industry etc and answers to the above questions (and others) and it will generate the batch of documents you need to read and the best people / agencies for you to speak with.

I also agree that even as the first callers, you're on hold for an extended period of time which makes it very difficult. I appreciate staffing limits however an online chat function would make it easier to go about business whilst waiting for your turn.
Robyn over 1 year ago
Problem is that most employment related questions have to be answered with "it depends" because of the complex rules that have been put in place, either to protect employees from being treated unfairly by employers or to protect the Revenue from people operating outside the rules. Small businesses should be able to access a one stop shop to find out what ALL the requirements are, not just Commonwealth laws but State too. And small businesses should not be expected to know what questions to ask!
Tiffany Waters, ATO over 1 year ago
Thanks Robyn,
Is this something that gets easier as you gain more experience taking on employees? Do we need to do something different for employers new to this vs more experienced employers?
Robyn over 1 year ago
New employers would only need to do certain things once, eg register for PAYGW, whereas existing employers would already have this in place and just need to add a new employee in compliance with the current requirements at the time. For an existing employer, even if you can remember what you did last time you hired someone, which could be months ago, you still also need to know what are the current requirements at any given time (because what you did last time might no longer be correct given changes). As the rules keep changing, it is always a challenge knowing what to do, especially when you don't know what questions to ask. I like the "wizard" suggestion by DoyleS. Perhaps the first question should be "Are you already established as an employer?", and then if you answer yes, the questions about initial setup as an employer are bypassed.
Tiffany Waters, ATO over 1 year ago
Great ideas - thanks Robyn
Tiffany Waters, ATO over 1 year ago
Thank you for your insights and ideas. This information will help the squad understand the problems small business face on this topic and how you think we should fix it. Please keep sharing your insights and ideas.
BroadbandConsultant over 1 year ago
The onerous overheads and liabilities that go with employment mean that there is a bit of a "no man's land" between a one-person operation and an operation of (probably) 8-10 people or more where the overheads can be amortised over a reasonable base of activity.
Peter.Fisher 7 over 1 year ago
I think the current complexities associated with taking on new employees would be simplified by a "one-stop-shop" which amalgamated the various departments concerned with a step-by-step questionnaire to guide small business operators through the employment maze.