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Employee Benefits Your Business Must Provide
Hiring employees means providing a range of benefits. Fullstack explains the employee benefits that Australian businesses must provide.
Don’t get caught out by not providing the right employee benefits.
Getting ready to hire your first employees can be a complicated and challenging process. There are many factors to consider when selecting and hiring an employee, including ensuring you’ve chosen the right person for the job. The legal requirements then surrounding employment details can be unclear for many new businesses and startups.
Australian employment law dictates that businesses must provide employees with a range of different benefits. Failing to provide these benefits can result in a serious legal breach — ensure that you provide your employees with the following benefits:
The most obvious of all employee benefits is direct payment via a salary or wages. The amount that a business is required to pay an employee can vary based on a number of different factors.
Firstly, a business must ensure that it pays its employees a minimum wage. The minimum wage that you must pay your employees can be found via the Fair Work Ombudsman website.
Employees and employers are able to negotiate and agree on a salary under the condition that the salary complies with the Fair Work Act. This act governs employment law in Australia, and guides the Fair Work Commission. The Fair Work Commission is a regulatory body that sets awards, or the minimum terms and conditions of employment for specific types of employees.
Awards also dictate specific legally binding terms and apply to employees in each individual industry or occupation. In many cases, a business will employ an individual in a role that is covered by an award. In this case, the business must pay them the minimum amount set out in the relevant award. If you’re not sure whether employees at your business are covered by an award, it’s possible to check via the Fair Work Ombudsman Award Finder.
- If your business employees are covered by an award, it’s important to record:
- The details of the award
- The classification of the award
- The minimum salary that must be paid to the employee.
The above details must be included in an Employment Contract.
Australian businesses are obligated to contribute to the superannuation funds of their employees. Superannuation is money that is held during the working life of an individual and invested on their behalf in order to fund their retirement.
Australian law dictates that employers must make superannuation contributions of at least 9.5% of the ordinary earnings of an employee. In most cases, businesses will make superannuation contributions to a default fund. Employees are able to notify their employers when they want superannuation contributions to be made into a different fund of their choice, which is completed via a Standard Choice Form.
Personal Leave & Annual Leave
Another important employee benefit in Australia is annual leave (with the sole exception of casual employees). Full time and part time employees must be paid annual leave, calculated based on their ordinary hours of work. In most cases, an employer must provide an employee with four weeks of paid annual leave every year.
Some industries and professions entitle employees to five weeks of annual leave. If you’re not sure how much annual leave your employees are entitled to, the Fair Work Ombudsman provides a simple Leave Calculator.
Part time employees are entitled to annual leave, but this leave is calculated on a pro-rata basis. The amount of leave that must be provided to part time employees is calculated in proportion to the total amount of hours that they have worked over time.
Full time employees are entitled to ten days of paid personal leave every year. This personal leave covers sick and paid carer’s leave. Part time employees are also entitled to personal leave, calculated on a pro-rata basis.
- Businesses must provide employees with unpaid parental leave in the event that a child is born or adopted. Parental leave covers:
- Maternity leave for mothers
- Parental leave for fathers and partners
- Adoption leave for adoptive mothers and fathers.
All employees in Australia are entitled to minimum parental leave entitlements. In some cases awards, company policy, agreements, or additional laws may provide employees with extra entitlements. These entitlements can’t be less than the minimum entitlements outlined in the National Employment Standards, however.
Long Service Leave
Another important one of the employee benefits that Australians have is long service leave. This comes after the employee has been working for the same company for a long period of time. Long service leave is a period of paid leave that employees are typically entitled to after five years of employment with the same company — but the amount of time can vary from state to state.
In New South Wales, employees are entitled to a minimum of two months of long service leave if they have continuously worked for the same employer for at least ten years.
Employee Benefits: What You Need to Know
- Ensuring that you’ve chosen the right person for the job and are meeting all your legal requirements as an employer is critical when hiring new employees. Employees are obligated to provide:
- Superannuation contributions
- Sick leave
- Annual leave
- Parental leave
- Long Service Leave
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Stuart Reynolds is the founder of Fullstack Advisory, an award-winning accounting firm for businesses leading the future. He is a 3rd generation accountant who specialises in tech companies, agencies and entrepreneurs.