Warning on raft of payroll law changes in 2020

Australian Payroll Association highlights six issues for employers

Warning on raft of payroll law changes in 2020
Tracy Angwin


A new suite of major changes to employee awards and legislation, affecting small-medium enterprises up to large organisations, will come into effect next year, sector network the Australian Payroll Association (APA) warns.

The warning arrives hot on the heels of leading vehicle sales company AP Eagers revealing it had reported employee entitlement shortfalls to the Fair Work Ombudsman (FWO) – one of a host of high-profile firms making such admissions.

"Legislation and individual awards around employee entitlements change regularly APA CEO Tracy Angwin says.

"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.

"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.

"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."

The advices comes after the APA revealed survey findings including that that 83 per cent of organisations are using payroll technology developed 20 years ago or more.

Read the APA’s take on transport firms staying payroll-compliant, here

The APA offers six changes to employee awards and legislation to watch out for next year:

  • From January 1, employers must pay super on an employee’s gross rate of pay – including on any salary they have sacrificed. 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
  • Salary sacrifice cannot contribute to mandatory super contributions. January 1 will also mark the end of employers utilising a salary sacrifice to make up all, or part, of their compulsory SG contributions. This is the second component of the SG changes. 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," Angwin says
  • From March 1, employers will need to notify employees in writing of their annualised salary and their maximum ordinary working hours outside of 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. 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
  • Employees must keep records of the start, finish and break times of their employees. This means that any excess hours worked in each roster or pay period must be paid to the employee as overtime, if their annual salary does not pay them at or above the minimum wage for their total hours. Importantly, 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 says. "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."
  • From March 1, each year employers must pay employees for overtime worked if their salary does not cover that overtime. If an employer finds that their employee received less pay on their annualised wage agreement than if they were paid under the award, they need to pay the employee 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
  • Employers will need to self-correct any unpaid superannuation, under the proposed SG amnesty. The SG Amnesty Bill passed the House of Representatives in November and has now moved to the Senate. The bill, which is likely to be passed, will provide 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. After the amnesty period, higher penalties will be applied – up to 200 per cent. "Those who have failed to come clean on unpaid superannuation should act on this sooner, rather than later," Angwin advises. "This will give them more time to maximise the opportunity and navigate any unseen complexities."


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