When I started in franchising, it meant that by default, I became a Paymaster. Yep, I had to process the pay. Now, I had been expert at receiving a wage, however, as for paying the wages, well that was steep learning curve indeed.
So here are seven things I wish that I had to known when becoming the paymaster.
- Pay Calculator
Firstly, I had to decide how much to pay my staff, was I going to pay as per the Award and if so what Award? Should I create an Enterprise Agreement to pay under? Your franchisor should be able to point you in the right direction here, but if they can’t, then I suggest you speak with your Lawyer and/or Accountant. Often chamber of commerce or professional associations have a resource bank of HR advice and experts. In my time I used both instruments, (the fancy word that means either the award or the agreement– this I also learned). Both have pros and cons. What is important though is, that whatever instrument you choose to use, you get to know inside out, because believe me, when you have employees they will ask you questions about every section.
I had always received my payslip with much excitement, but I didn’t realise that there are rules around the pay slips. Firstly they have to be given to you within 1 working day of receiving the payment, even if the employee is on holiday. They can be either hard copy or electronic but either option must have the same information on them. They have to have both your name and the employee’s name, your ABN, the pay period, date of payment, gross and net pay, you even have to have all the superannuation details on them see www.fairwork.gov.au for the full list. Your payroll software should ensure that you meet all these obligations, but it is handy to know them anyway. If you are paying by electronic deposits there are also rules around when then payments should be in the employees’ bank account.
- Payment Summaries
The old “Group Certificate” is now known as a payment summary or PAYG summary and as an employer it is your responsibility to prepare these at the end of financial year each year. These summaries show all the payments you have made to your employee and the amounts you have withheld from those payments. You have to give a summary to every employee you paid in the financial year, no exceptions. This is required, even if you did not withhold any tax from their pay. Again, your payroll software will help you meet all the requirements.
- Tax and Superannuation
As an employer, you also have the responsibility to deduct tax from your employee’s wages. The Australian Taxation Office gives you a guideline on how to do this and it changes every financial year so be sure to update your payroll software.
You are also responsible for paying the compulsory superannuation guarantee for each employee. There are many rules around how this is done and is worthy of a blog on its own. So I have written one in this series.
- Deducting Pay and Over-payments
There are some occasions where you have to deduct money from an employees wage before payment. Examples are by a court order: (think family support), or if the employee agrees in writing and it is principally for their benefit: (think uniform purchase); salary sacrifice; extra superannuation payments or health fund contributions. All these deductions have to be authorised by the employee and must be shown on their payslip and in your record keeping. Naturally, if you are deducting these payments on behalf of the employee you must also forward the deduction onto the relevant authority; health fund or superannuation fund.
- Final Pay
When you and your employee part ways, regardless of how this comes about, it is your responsibility to pay their final wages. It can be done either on the last day of work or at the next pay period. This final pay must include all outstanding wages for hours worked including the penalty rates and allowance; any accumulated annual leave, but you do not have to pay out their sick or carer’s leave.
Hours of work
Now this should be easy shouldn’t it? Employees turn up, clock on, work, clock off. Then you pay them for the “work” part right? Well, in essence yes, but it is clarifying that “work” part. Things like team meetings, training, trial shifts and all work required to open and close the business is classified as “work” and as such has to be paid by you the employer.
The above seven things are the reason that I eventually employed someone to do my payroll, an expert in their field. Being a Paymaster requires you to know a LOT! So I say, think about handing it over to someone who specialises in this field. It is money well spent and allows you to concentrate on what you do well… run your franchise business.