All Australian employers should understand their legal obligations when it comes to employee pay. To avoid legal issues, you must provide accurate and timely payments to employees.
In this article, we’ll discuss legal requirements around payslips, wage payments and compulsory superannuation payments for your employees in Australia.
How do I pay employees?
To pay employees, you need to calculate their gross pay based on their salary or hourly rate, deduct pre-tax and post-tax deductions, and withhold income tax under the PAYG withholding system. You must also provide payslips and ensure timely payment via methods like direct deposit
What do I need to know about paying employees?
To pay employees correctly, you must understand accurate payroll processing, compliance with labour laws, tax obligations, and record-keeping requirements. Ensuring timely and accurate payments is crucial for maintaining employee satisfaction and avoiding legal issues.
Below, we cover everything you need to know.
Paying employee salaries & wages to employees
Employers in Australia must pay all employees at least the national minimum wage. This amount may vary depending on the industry, occupation, and level of experience of the employee. To determine your employees’ minimum wage rate, you should always check the relevant award or agreement on the Fair Work Australia website
Paying super and providing leave to employees
Employers in Australia need to pay superannuation and provide paid leave for employees. Employers must also report withholding taxes. You can learn more about your legal requirements on the Australian Taxation Office (ATO) website.
Providing payslips to staff
According to Fair Work Australia requirements, all employees must must receive a payslip for each pay period. Payslips can be provided to staff electronically or on paper.
Payslips must include the employee’s name and the pay rate, employee’s hours worked, gross and net pay, and any deductions made. An employee’s payslip should be provided within one working day of receiving the payment.
Paying super & other compulsory deductions
Employers are required to deduct taxes and superannuation contributions from their employees’ wages. Superannuation contributions must be paid to the employee’s chosen superannuation fund. Taxes are withheld based on income and the tax file number declaration.
Employers can also provide salary sacrifice arrangements and union fees. Employers can also help staff with voluntary deductions for workplace giving, insurance and more.
How to calculate and pay employee wages in Australia
Follow our steps for calculating and paying wages for workers below.
1. Choose payroll software that is Single Touch Payroll (STP) compliant.
Automate employee salary and wage calculations using small business-friendly STP software like Payroller. STP software helps you maintain accurate records of all employee wages paid and meet ATO laws.
2. Generate payslips for your employees
Providing payslips ensure that your employees have an accurate record of your wage payments to them, their leave balances and superannuation entitlements.
3. Pay your staff wages on time
Paying employees accurately and on time can be done in an affordable way using ABA files. Learn how to prepare an ABA file with Payroller and upload it to your banking provider to pay your employees with our user guide.
When you use cost-effective payroll-only software like Payroller, your business stays up-to-date with legal requirements of paying employees in Australia. Our STP software also ensures accurate payslips, and includes compulsory deductions in payroll.
We recommend a periodic review of your existing payroll processes and software with our tutorial.
What payment methods can I use to pay employees?
The most common and efficient payment method is direct deposit into employees’ bank accounts. This method is preferred for its speed and ease of record-keeping. Cash and cheques are less common due to the need for manual record-keeping and potential security risks.
