Your employees will generally be covered by an award that specifies the minimum conditions and entitlements of employment, including a minimum rate of pay, superannuation, and leave entitlements. To attract and retain quality staff and remain competitive in your local market, you may decide to offer more than the minimums. For example, you could pay a higher rate and/or pay more superannuation.
Tip
Because payroll management is complex and you must meet several employer obligations related to pay and payslips, consider outsourcing this to a payroll company or service.
Salary or wages
You will need to pay each employee either:
- a wage (based on hours worked), or
- a salary (annualised payment for services, paid progressively throughout the year, usually monthly).
Pay slips
You must give each employee a pay slip for each pay, clearly showing:
- their gross pay
- deductions, including tax and superannuation
- their nett pay
- entitlements, such as accrued leave.
There are several payroll systems available that will calculate all of the above and generate pay slips. Using a payroll system also helps to ensure that calculation of payments and entitlements are correct.
Superannuation
As an employer, you are required to meet the requirement of the super guarantee, which means paying a minimum percentage of each employee’s ordinary time earnings as superannuation.
You must pay superannuation to all of your full-time, part-time and casual employees, including those who are temporary residents.
Employees covered by awards must be given their choice of superannuation fund.
For further information, seek professional advice and visit the Australian Taxation Office website.
Tax
As an employer, you have obligations relating to your employees’ withholding tax.
Ramifications of late or incorrect payments
Taxation can be a complex issue and it can significantly affect your practice’s cash flow, unless you manage it properly and make payments as soon as they are due. For example, if you don’t pay your employees’ income tax or superannuation each month, when you do come to pay them, you might find that you have insufficient funds.
Tax legislation and regulations frequently change and as there are legal and financial implications for errors and omissions, you should obtain financial advice from a person or organisation with solid experience in providing services to general practices.
See the Australian Taxation Office website for further information.