Who you hire, and when, can have a big impact on your business. There are several legal requirements to be aware of before hiring staff.
Before you hire someone, you’ll need to consider:
- What positions you’re offering.
- Any paperwork you’ll need to complete.
- The wages and entitlements you’ll be offering your employees.
- What types of employees you should bring on.
Employee Type:
Different types of employment will have different obligations for your company.
Different types of employees include:
- Full-time employee: Working 38 hours or more a week ongoing.
- Part-time employee: Working less than 38 hours per week but has guaranteed minimum hours.
- Trainee or apprentice: Does a combination of work for you and training to receive a qualification, certificate, or diploma.
- Casual employee: Work hours vary each week depending on availability.
- Fixed Term employee: Works for your business for a fixed period of time.
- Shift Workers: Works shift hours and receives extra payment.
- Temporary employee: Works for your business temporarily, often through an employment agency.
- Contractor: Someone who has their own business and contracts their work to you.
It’s important to carefully consider whether your company should hire employees or contractors. Read this blog article on how to choose.
Once you’ve decided to hire employees, consider the following.
Know The Requirements When Your Employee Starts:
- Tax File Number (TFN) declaration form
- Have them fill the form out.
- Fill out the payer section of the form with your business information.
- Keep a copy of the form for your records.
- Send the original form to the address on the form within 14 days.
- Superannuation
- Determine if you have to pay super.
- Determine the default super fund if your employee doesn’t choose their own.
- Give employees the standard choice form to complete.
- Calculate the minimum contribution to pay on ordinary time earnings.
- Pay the super guarantee amount owed each quarter electronically (through EFT or BPAY).
- Provide TFNs to the super fund when you make your first contribution or within the first 14 days of receiving their TFN form.
- Keep record of super payments.
- Fringe Benefits Tax (FBT)
- If you’re providing fringe benefits register for FBT.
- Complete an FBT return and pay by 21 May each year.
Understand How To Pay Employees:
- Determine how much you need to pay your employees.
- Determine entitlements to public holidays, sick, recreation, long service, paid parental leaves, and overtime and penalty rates.
- Set up a payroll system so that your employees are paid accurately and on time. Consider hiring an accountant to do this for you if you’re uncomfortable doing this yourself.
To find out more about paying your employees, follow the following links:
Pay As You Go Withholding (PAYG)
You need to withhold tax from what you pay your employees and some businesses. This is pay as you go (PAYG) withholding. This applies to employees, workers you have voluntary agreements with, contractors, and businesses that don’t give their ABN number.
First, you need to register for PAYG withholding.
Next, use the ATO calculators to determine how much to withhold.
You might also have to pay payroll tax if the wages you pay are beyond a certain amount.
Report Super and Tax Payments Electronically
You need to report payments that you make to employees to the ATO directly at the same time you pay them. You can do this with Single Touch Payroll.
This includes:
- Salary
- Wages
- Pay as you go (PAYG) withholding
- Super information
Employee Health and Safety
You have the legal responsibility as a business owner to set up safety and health practices in your workplace.
You need to protect customers, the public, visitors, employees, contractors, and volunteers from any health or safety issues that could arise because of your business.
You must also take out workers’ compensation insurance. You can find more about that in the free ebook The Ultimate Guide to Starting an Australian Business.