Article Series
This article is part of a 7 part series. Other articles in this series are shown below:
- A Word from the Chairman
- Personal property securities regime
- Employment law changes that will impact your business in 2011
- Markhams - meet our newest member firms.
- Funding business expansion
- Division 7A - another sting in the tail
- Have you overpaid GST?
Author: Adrienne Unkovich MD, Workforce Guardian.
A couple of important changes to employment relations legislation were introduced at the start of the New Year. There was of course the much heralded commencement of the first nationally-funded Paid Parental Leave scheme. This has been big news for weeks now as employers grapple with understanding what's required of them.
As you may be aware, under the new scheme eligible employees are entitled to 18 weeks' pay at the federal minimum wage of $570 a week before tax if they are the primary carer of a newly born or adopted child. As an employer, you will be responsible for administering Paid Parental Leave for your eligible employees from the start of the next financial year.
Essentially, your role in the Paid Parental Leave scheme is one of paymaster. If you haven't done so already, register your business for the scheme through Centrelink Business Online Services providing information such as your business bank account details, pay cycle details, business name, Australian Business Number (ABN), and contact details.
You've got another few months to make any necessary adjustments to your payroll system as well as developing and implementing appropriate policies in your business so you're ready to provide parental leave pay from 1 July 2011.
If you have an eligible employee – and the eligibility rules are complicated – your business will be notified by the Family Assistance Office and asked to provide further information and confirmation. When your employee becomes eligible for the leave pay, Paid Parental Leave funds will be deposited into your nominated business bank account before your employee's usual pay cycle cut off date. The funds will be provided fortnightly over 18 weeks, or through three six-weekly instalments.
When you pay your employee, you will need to withhold tax from the Parental Leave Pay under your usual PAYG withholding arrangements. You also need to keep financial records of all funds received and paid to the employee. Any unpaid Parental Leave funds need to be returned to Centrelink.
Unlike normal employment conditions, you are not required to make superannuation contributions for Parental Leave Pay and nor is it subject to payroll tax liabilities or workers compensation premium liabilities.
If all this sounds like a lot of unnecessary administration for something that could have been handled independently from your business, you're not alone. While most employers would agree that it's important to retain a connection with an employee during a parental leave period, most would also be at pains to point out that placing the burden of administering the scheme on to them is not a positive outcome. Although the scheme is 100% funded by the Government, you won't be reimbursed for your time and expenses in setting up the system and managing it in your business.
Small Business Definition
The second important legislative change which came in with the New Year – but has received much less coverage in the wake of the Paid Parental Leave scheme – is the change in definition of a small business.
As of 1 January 2011, the definition of 'small business' for dismissal in the Fair Work Act 2009 changed. Now, only businesses that employ fewer than 15 employees – by simple headcount – qualify as a small business when an employee makes an unfair dismissal claim.
Before the adjustment, a small business was one that employed fewer than 15 full-time equivalent employees.
This is a very important distinction.
If you are one of the many business owners who employ a number of part-time staff and encourage job sharing and flexible working arrangements, you could now be disadvantaged. Your employees may do the work of fewer than 15 full-time equivalent staff, but in themselves add up to more than 15 people. If this applies to your business, you'll find you are now ineligible for the special unfair dismissal arrangements that apply to small businesses.
These special arrangements include a minimum employment period of 12 months before employees can make an unfair dismissal claim, and a simple Fair Dismissal Code to help employers ensure dismissals are not unfair.
Any business with 15 or more employees – by simple headcount – is now vulnerable to the same unfair dismissal rules that have already resulted in a surge of claims against employers.
In the 2009-10 financial year alone, unfair dismissal applications increased to more than 13,000 – a staggering 63% increase compared with the previous year, before the introduction of the Fair Work Act 2009.
Employment laws in Australia are a highly complex area for small business owners. But it's critical that businesses hire, manage and terminate employees by the book and we recommend you always to check any advice you receive from Fair Work Australia with an employment relations expert like Workforce Guardian. Cutting corners will get your business in all sorts of trouble.
Free webinar
To help businesses, Workforce Guardian is running the following webinar session to explain these new rules:
Paid Parental Leave
Date: 20 April 2011
Time: 11:00 am AEST
Register now at www.workforceguardian.com.au/webinars
Workforce Guardian is Australia's leading online employment relations service for small and medium-sized businesses. It provides all the tools employers need to manage employees in compliance with current Australian employment law.
This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice may be necessary in particular transactions or on matters of interest arising from this article. Workforce Guardian Pty Ltd (http://www.workforceguardian.com.au/) is not responsible for the results of any actions taken on the basis of information in this article, nor for any error or omission in this article.
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