Payroll (updated Oct 2020)
A person working on your farm may be engaged as an employee, a family member, an independent contractor or a share farmer. How they are engaged will determine which laws apply to the working relationship, especially in regard to minimum entitlements in the National Employment Standards
There are many things to think about when you’re hiring staff for the first time. Visit the pay rates section to:
- Check classifications under the Pastoral Award 2020
- Check the minimum pay rates
- Decide whether the position will be full-time, part-time or casual
- Learn about breaks, maximum hours of work and overtime.
A summary of this information is also available in UPDATED: How do I tackle pay rates? (from Nov 2020)
You can also calculate pay, leave and entitlements with the Pay and Conditions Tool (PACT) – just select the Pastoral Award 2010, the classification and type of employment
Pastoral Award 2010
The Pastoral Award 2020 is a ‘modern award’ which means, among other things, that all minimum pay and conditions for employees in a given industry will be the same Australia-wide.
Reminder: as of July 1 2014 – pay rates, penalty rates and loadings are the same in every state and can be found in the Pastoral Award 2020 here
We expect the Pastoral Award 2010 to be finalised sometime in the second half of 2020 and renamed the Pastoral Award 2020. While most changes have been already inserted into the award
we expect that there will be substantial changes to layout and numbering of the award.
Who & when
- the employer’s name and the employee’s name
- your Australian Business Number
- the date the employee started work.
Type of employment, hours & rates of pay
- if the employee is full-time or part-time
- whether the employee is permanent, temporary or casual
- the employee‘s pay rate, including gross and net amounts and any deductions from the gross amount
- loadings, allowances, bonuses, incentive-based payments, penalty rates or other paid entitlements that can be singled out
- if a penalty rate or loading must be paid for overtime hours: the number of hours of overtime worked, or when the employee started and finished working overtime
- if the employee works casual or irregular part-time hours and has a guaranteed pay rate for a set period worked: number of hours worked
- if you and your employee have agreed to an individual flexibility agreement: a copy of the agreement.
Leave (all types)
- leave taken
- leave balance
- amount paid
- pay period
- date(s) paid
- name of super fund
- a record of the employee’s super fund choice and the date they made that choice
Pay slips can be issued electronically or on paper. If you keep good written time and wages records, producing a pay slip becomes fairly simple.
What information must be on the pay slip?
This list looks daunting. However, if you have all the source documents you need, and use our Model Pay Slip and/or a spreadsheet or manual sheet from your accountant, the process is fairly simple.
- Employer’s name
- Employer’s Australian Business Number
- Employee’s name
- Date of payment
- The pay period (the period the payment is for e.g. 18/3/20 to 21/3/20)
- The gross pay and net pay
- Loadings, allowances, bonuses, incentive-based payments, penalty rates or other paid entitlements that can be singled out
- If the employee is paid an hourly rate: the ordinary hourly rate; the number of hours worked at that rate and the amount of pay at that rate
- If the employee is paid an annual rate (salary), the rate as at the last day in the pay period
- Any deductions from the employee’s pay, including:
- amount and details of each deduction
- name and number of the fund / account the deduction was paid into
- Any superannuation contributions paid for the employee’s benefit, including:
- the amount of contributions made during the pay period (or the amount of contributions that need to be made)
- the name and number of the superannuation fund the contributions were made to.
What happens if I don’t give my employees pay slips?
Fair Work Inspectors can give employers a fine (infringement notice) for not giving employees proper pay slips or keeping the right records. Fair Work Inspectors can also take employers to court if their failure to meet the requirements is serious, willful or repetitive.
Should leave balances be on pay slips?
While it’s best practice to show employee’s leave balances on their pay slip, it’s not a requirement. Employers need to tell employees their leave balance if they ask for it. If not kept up to date this can be a daunting task. Go to the ESKi leave section for some useful templates.
Employers can only deduct money from an employee’s pay in certain circumstances, i.e. the employee is over 18 and agrees in writing and the deduction is principally for their benefit.
Electronic pay slips
Electronic pay slips must have the same information as paper pay slips. They need to be given to each employee by email or into a personal account. They cannot just be stored electronically. Visit the record keeping section for a useful Authority to Deduct template.
Consider a computerised payroll package & single touch payroll
Talk to your accountant or bookkeeper about setting up a computerised accounts package, such as MYOB, Xero or Quickbooks. Farmers who use electronic payroll say that the time saved in keeping employee pay and leave records outweighs the cost tenfold. Electronic pay slips can be printed and/or emailed to employees. Single Touch Payroll (STP) is a new way of reporting tax and super information to the Australian Tax Office (ATO). Read more about Single Touch Payroll and visit the ATO
When you pay employees, you need to withhold tax from their pay and send these amounts to the Australian Taxation Office regularly. For each new employee, you will need to:
- give them a Tax file number declaration (NAT 3092) to complete and return to you
- complete Section B of your employee’s Tax file number declaration
- register for PAYG withholding (if you haven’t already)
- forward the completed original of the Tax file number declaration to the ATO within 14 days of the employee’s start date
- or submit your TFN Declaration electronically through your payroll software
- keep records of all hours worked, gross wages paid, tax deducted and the superannuation due to the employee
- at the end of the financial year, employers need to advise the employee and the Australian Taxation Office of the gross wages and withholding tax.
- employers are transitioning to Single Touch Payroll – this will mean no requirement to produce physical “Group Certificates” or “Payment Summaries”
Single Touch Payroll requires an employer to maintain their payroll in an approved payroll software product, and each pay run, payroll data is lodged with the ATO.
At the end of the financial year, after reconciling payroll, the step known as “Finalisation” is required, and the payroll data is submitted. Employees will then access their “Income Statement” via their My Gov account or should they see a Tax Agent for their Taxation affairs, their payroll information will be flagged as “tax ready” and accessible by their Accountant.
Learn more about how to get the paperwork you require
Tax withheld calculator
The Tax withheld calculator on the ATO website helps employers work out the tax you need to withhold from payments you make to employees. To use the calculator, you need the information your workers supply in their Tax file number declaration (NAT 3092)
By law, employers have to keep written time and wages records. However, keeping accurate time records is about far more than compliance with the law. The hours a person works on average each week has a significant impact on their work-life balance. A common reason for poor retention on some farms is having employees work unreasonable additional hours. The Pastoral Award 2020 and National Employment Standards provide details on ordinary and overtime hours of work.
There are a couple of simple ways of keeping track of employees’ hours of work:
A roster is a list or a plan that shows when people who work on the farm will be on duty. Rosters are typically used to schedule time off and to schedule tasks. A roster can be a formal computer-generated spreadsheet or written on a year planner, calendar, whiteboard or a roster template
The success of a roster depends on the planning that goes into it and commitment by everyone to make it work. It needs to be fair for everyone and to be stuck to except in exceptional circumstances.
It is important to consider how many hours each person on the farm is requested to work (not just employees, but family members too). Sustainable rosters take into consideration timing that best suits the individuals, including breaks between shifts and start and finish times. Under the National Employment Standards certain employees (including parents with children under school age) have the right to request flexible working arrangements.
Include time for taking breaks and going on leave in the roster. Make sure that people are covered for when they are on a break or leave. Breaks are important for providing rest time as well as an opportunity for the team to get together and chat. See the Pastoral Award 2020 and National Employment Standards to read about entitlements for meal breaks, rest breaks and leave.
The ESKi is designed to get you started and is integrated with the resources across this website. The documents and links below will help you with this topic. This includes templates you can download and customise for your farm, including your business name, logo, etc. and PDFs you can print and write on.
|UPDATED: FAQ – How do I tackle pay rates? (Nov 2020)|
|Pay and Conditions Tool (PACT) – Fair Work Ombudsman||Website|
|FAQ – Backpackers – what do I have to pay them?|
|FAQ – What’s the difference between part time & casual workers?|
|Model pay slip||Word template|
|Single Touch Payroll (July 2020)|
|Single Touch Payroll (ATO)||Website|
|Choosing a super fund Standard Choice|
|Time & wages book example|
|Roster notes & template||Word template|
|Fair Work self-audit checklist for businesses|
|UPDATED: Pay rates (Oct 2020)||web page|
|Overtime and ordinary hours fact sheet|
|Employment & Reward||web page/section|
|National employment standards||web page/section|
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- Are you paying at least minimum wages?
- Are your employees classified correctly according to their skills and experience?
- Do you give your employees written payslips within 24 hours of them being paid?
- Do you include the following details on the employee’s pay slip:
- Your ABN and legal and/or trading name
- Employee name
- Date of payment and period of payment
- Gross and net amount of pay
- Are you keeping written time and wages records?
- Are you paying superannuation?
- Are you deducting tax?
- Do casual employees receive the correct loading?
- Are part-time and casual employees engaged for a minimum of 3 hours?
- Do you keep time and wages records for 7 years?
- Are your rosters prepared well in advance so that all involved can plan off-farm activities?
- Do you genuinely consult with employees about changes to their regular roster and ordinary working hours?
- Do you stick to your rosters except in exceptional circumstances?
Try this self-assessment task
Here’s a way to test what you have learned so far. Try completing the Fair Work self-audit checklist for businesses (designed to help employers conduct a self-audit of their compliance with various Acts & Regulations) – to help you out, we have filled in some of the boxes already.