5 Australian payroll trends coming in 2020
We recently shared payroll 2020 predictions by the NZPPA, and now it’s time to delve into this year’s trends for Australia. Our friends at Employment Innovations share their predictions for payroll 2020 and what to look out for in the coming year.
1. Single Touch Payroll (STP) | The continued evolution
STP has become a common phrase since its introduction in 2018. Now with all businesses required to comply after 2019, the ATO is moving ahead with the final stages of the STP rollout.
The final step will mandate the requirement to lodge earnings quarterly for closely held payees of small employers in July 2020. Closely held payees are those who are ‘not at arm’s length’ from the entity they receive payments including:
- Family members of a family business
- Directors or shareholders of a company
- Beneficiaries of a trust
This may pose an issue for small businesses with unpredictable annual profits and director earnings, who previously declared earnings at the end of the financial year. Also looking ahead the ATO has started analysing the STP data received and are looking at Superannuation Guarantee ensuring payments are being processed on time.
2. Single Touch Payroll | Systems migration
With the introduction of STP requirements, companies have begun looking for new systems to meet their changing payroll needs. This trend is due to multiple factors, some of which are detailed below:
- Looking for better technology (cloud-based software, time and attendance, employee self-serve, Single Touch Payroll)
- Single Touch Payroll (STP) has hit some legacy platforms hard that could not justify investing in development requirements to comply with STP
- Watch out for continued market share capitalisation from modern cloud-based pure payroll and rostering systems such as KeyPay
- Better integration with other systems (accounting or HR Platforms)
- More compliance
- Payroll expertise by outsourcing the payroll function
Before STP, companies just needed to export and import year to date earnings from one system to another and only issue payment summaries from their current system. Now with the introduction of STP, the payroll data is reported to the ATO on a pay event basis (in real-time), impacting migration of employees’ earnings.
So, what are the options to get this right and ensure there are no issues at the end of the financial year?
- Migrate your year-to-date employee information to the new payroll solution.
- If you do not migrate year-to-date employee information to the new payroll solution you can start reporting your employee year-to-date amounts from zero.
- Migrate your year-to-date employee information to the new payroll solution and use the original BMS identifier in future pay event reporting.
KeyPay will provide detailed support articles to guide you through the process in the months leading up to EOFY in Australia.
3. Annual salaries in Modern Awards
The Fair Work Commission is introducing changes to the terms of several Modern Awards which will mean that from 1 March 2020 there will be new obligations on employers paying annual salaries.
As a business, you need to ensure your payroll system is ready for such changes. Below we list system requirements needed to accommodate new obligations:
- Awards updated with new rules
- The ability to have salaried employees on timesheets for record-keeping only
- Roster functionality is ideal
- Being able to report expected worked hours vs. actual hours worked
- Back pay calculations and taxation available (when applicable)
It is clear that these changes will have a significant impact on payroll professionals. The practice of recording start/finish/unpaid break times for salaried employees, and performing an annual reconciliation, will be completely new for many Payroll and HR practitioners.
The impact on white-collar industries will be particularly interesting. The culture shift in office-based professions to recording specific hours worked has the potential to catch out businesses where this has traditionally been overlooked. However, it's crucial to remember that these changes must be complied with as a breach will be treated just like any other breach of a Modern Award which means serious financial penalties apply.
Fortunately, the KeyPay team has been hard at work enhancing the existing pay conditions rules tester which will provide a hassle-free method of ensuring employers meet their obligations under the new annualised salary provisions in the affected Modern Awards.
4. Salary sacrifice and OTE
A bill introduced to close a loophole used by some employers to reduce their super contributions to their employees came into effect on 1st January 2020.
The Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Bill 2019 prevents employers from counting any salary sacrifice contributions made by employees as part of the employer’s statutory Salary Sacrifice and Superannuation Guarantee Contributions (SGC) when meeting minimum superannuation payment obligations.
With the introduction of this bill, employers will not be allowed to factor in the post-salary sacrifice base or utilise the employee’s salary sacrifice super as part of their superannuation obligations.
5. Personal/carer’s leave
On 21 August 2019, the Full Federal Court of Australia handed down a decision in Mondelez Australia Pty Ltd vs. AMWU that introduced a change in the method of accruing and taking paid personal/carer’s leave for all Australian businesses. The Fair Work website gives a full breakdown of it here and provides answers to FAQs here.
The changes are outlined below:
- Full-time and part-time employees are entitled to 10 working days of paid personal/carer’s leave for each year of employment.
- The leave must be calculated in working days and not hours as it previously was. A working day is defined as the portion of a 24 hour period that an employee would be working.
- For every day of personal/carer’s leave taken, an employer deducts a day from the employee’s accrued leave balance. If an employee takes a part-day of leave, an equivalent part-day is deducted from the employee’s accrued leave balance.
KeyPay has introduced a personal/carer’s leave category that complies with the Fair Work Commission's decision on the accrual of this leave.
Stay ahead with KeyPay
KeyPay is built with compliance at its core and is constantly enhancing and adapting with legislation changes and requirements. 2020 looks to be a big year for payroll and the market. Is your current payroll solution prepared for the changes ahead?