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Wages & Employment. 2182GG. Employing Some One. Two types of Employment a Direct Employee or Subcontractor Employee – Contract of Service Subcontractor – Contract for Service With either a valid contract is formed as discussed last semester. Offer, Acceptances & Consideration. Awards.

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employing some one
Employing Some One
  • Two types of Employment a Direct Employee or Subcontractor
  • Employee – Contract of Service
  • Subcontractor – Contract for Service
  • With either a valid contract is formed as discussed last semester.
  • Offer, Acceptances & Consideration
  • Many jobs are covered by a federal or state industrial award.
  • Awards outline the rights and obligations of employers
  • legally binding minimum wage rates and employment conditions for employees.
  • The Award are the Terms & Conditions of the Employment Contract
  • Subcontractors employment conditions will be the contract
  • In may be a HIA, MBA or purpose written contract
breach of contract
Breach of Contract
  • Breach of Contract in either case will result in penaltiesBreaches of Contract for Subcontractors will result in damages etc as per contract or common law
breaches of contract employee
Breaches of Contract - Employee
  • Employee can resign at any time
  • Notice specified by Award
  • If this breached Notice Period deducted from money owed.
  • Termination given with notice
  • Immediate Termination notice period has to be paid out. (Unless Award specifies different for things such as Misconduct)
serious breaches
Serious Breaches
  • As a Contract is present, fraud etc by either party may result in damages
  • Warman v Dwyer
    • Dwyer was Manager of Qld Division
    • Warman was exclusive distributor of product
    • While Dwyer was still employed he
      • Negotiated with supplier to not renew deal with Warmans
      • Induced experience Staff to leave Warmans
      • He then resigned, signed exclusive deal & employed staff as they resigned

He was required to pay damages equal to loss of profit

  • Any Business Structure can employ
  • No matter what business structure, the requirements are the same
  • Wages & Employments need to be kept
records that must be kept
Records That Must Be Kept
  • General records
  • full name of employer and ABN
  • full name of employee
  • classification of the employee under any award or enterprise agreement
  • whether the employee is employed full-time or part-time
  • whether the employee is employed on a permanent, temporary or casual basis
  • if the employee is an apprentice or trainee and the date the person started as an apprentice or trainee
  • date on which the employee was first employed by the employer
  • if the employee's employment has been terminated, the date of termination

Remuneration and hours worked

  • number of hours to be worked per week, per day or other period,
  • the employee's start and finishing times each day
  • rate of pay per week, day,
  • if piece work is prescribed, the number and description of pieces made by the employee and the rate per piece paid
  • gross amount of money paid to the employee and any deductions made
  • any other details to show that the requirements of the award or enterprise agreement relating to pay and hours worked are being met

Leave records

  • any leave taken by the employee
  • the employee's entitlement from time to time to that leave
  • the accrual (buildup) of that leave
  • amount of contributions made
  • period over which contributions are made
  • when the contributions are made
  • name of the fund or funds to which the contributions are made
long service leave
Long Service Leave
  • Date of Commencement of Employment
  • Copies of Forms Lodged with The Long Service Corporation
  • Employment Induction Records
  • Site Induction Records
  • Record of Training
  • Record of Licenses
employee or subcontactor
Employee Or SubContactor
  • Common Law Employee
    • Control Test
    • Integration Test
control test
Control Test
  • Who is the Controller?
    • Who determines hours of work
    • Who determines sequence of work
integration test
Integration Test
  • How does the person fit into the organisation
  • Is the working relationship a continuing one
  • Can the employee work for others
  • Can the person profit from good business management
common law
Common Law
  • Will affect issues such management control
    • Vicarious Liability for employees actions for tortuous Acts such as Fraud Negligence
    • Breaches of Statutory Law such as EPA, Driving Laws etc
    • Employment Conditions, does the award apply
    • Remember Statutory Requirement from ATO, Workcover etc may deem Common Law Contractors Employees
subcontractor or employee ato
Subcontractor or Employee -ATO
  • ATO has test to determine if the arrangement is an Employee or Subcontractor
  • This is called the Personal Services Income test
  • Remember the ATO is only interested Tax Paid
test 1 the results test
Test 1- The Results Test
  • You’ll pass the results test in the income year if you can answer ‘yes’ to allthree of the following questions for at least 75% of your PSI:
results test q1
Results Test Q1
  • Q1) Under your contract or arrangement, will you only receive payment when the work has been completed – that is, after producing the contracted resultTo answer ‘yes’, your contract must stipulate:
  • you have to produce an outcome before being paid, which may include progressive payments, and
  • you are paid this way.
example of q1
Example of Q1
  • A carpenter enters into a contract to build five tables. The contract states the carpenter will not be paid until all five tables are completed. The carpenter is paid when he completes all five tables. This contract will pass this first condition of the results test as the payment is linked to producing a result (completing the five tables).
notes to test 1
Notes to Test 1
  • If you’re paid on an hourly basis or daily rate for the services you provide, it’s unlikely you’ll pass the first condition of the results test as this payment would generally not be linked to producing a specific result or outcome
results test q2
Results Test Q2
  • Question 2: Do you need to provide the equipment or tools necessary to do the work?To answer ‘yes’ to this question, you need to supply all the equipment or tools that are required to complete the contracted work.
example question 2
Example Question 2
  • A painter is contracted to paint an office. As part of the contract, the painter has to provide their own tools and equipment including paint brushes, rollers and drop-sheets. As the painter has provided the necessary equipment to complete the work, they would pass the second condition of the results test
note to question 2
Note to Question 2
  • If no equipment or tools are needed to complete a job, you will pass this second condition of the results test
results test q3
Results Test Q3
  • Do you have to rectify defects in the work, or are you liable for the cost of rectifying defects?An carpenter is contracted to complete a project. Under the contract, the carpenter is liable to rectify any defects in their work at their own expense, even if they have to pay someone else to rectify the defects. This contract would pass the third condition of the results test as the carpenter is liable for the cost of rectifying the defects.
note to q3
Note to Q3
  • If you are entitled to invoice your payer for the hours you spend in rectifying any defects in your work, you will not pass this third condition of the results test.
personal services income
Personal Services Income
  • If you answered ‘yes’ to all three questions in the results test, you have passed this test and the PSI rules do not apply to this income and will be considered a Sub-Contractor for tax purpose
  • If you do not pass you need to asses for Step 2
80 20 rule
80/20 Rule
  • For the 80% rule, you need to work out whether any of your clients, or their associates, provides 80% or more of your PSI in an income year
80 20 rule33
80/20 Rule
  • If you receive PSI from a client and one or more of the client’s associates (for example, a company and a subsidiary of that company), this PSI is considered to come from one source
80 20 rule example
80/20 Rule - Example
  • Sasha is an IT consultant who designs software for two different clients in an income year. The income Sasha receives is PSI as the majority of the income is a reward for her knowledge, skill and expertise.
  • Sasha charges the first client $90,000 and the second $10,000 for the work she completes. This means 80% or more of her PSI comes from one client, as the first client has provided 90%
80 20 rule35
80/20 Rule
  • If you fail this test you must apply for a determination from the ATO if you want to be classed as a sub-contractor
  • If you pass this test you must asses Step 3
step 3
Step 3
  • You must pass at least one of the following tests
    • Unrelated Clients Test
    • Employment Test
    • Business Premises Test
unrelated clients test
Unrelated Clients Test
  • Question 1: Do you receive PSI from two or more unrelated clientsTo answer ‘yes’ to this question, you need to receive PSI from at least two clients who are not related or controlled by the same individuals or entities
  • Bryce is a Carpenter who works for 3 different companies in equal amounts (33%).
  • One Director is Common to all three Companies
  • These Companies would be deemed related and Bryce would not considered a Subcontractor for Tax Purposes
unrelated clients test40
Unrelated Clients Test
  • Question 2: Do you provide your services as a direct result of making offers or invitations (such as by advertising) to the public?
  • To answer ‘yes’ to this question, there must be a definite connection between the offer to the public and the engagement for the work. Making offers to the public includes advertising in a newspaper or business directory, maintaining a website, and word-of-mouth referrals
employment test
Employment Test
  • Question 1: Do you get employees, partners (in a partnership) or other contractors to perform at least 20% (by market value) of the principal work?
  • Gareth is a truck driver. He contracts:
    • another truck driver to drive the truck on long-haul trips
    • a bookkeeper to help with invoicing.
  • The truck driver is helping in the principal work while the bookkeeper is not.
employment test42
Employment Test
  • Question 2: Do you have one or more apprentices for at least half of the income year?
  • To answer ‘yes’ to this question, you don’t have to have the same apprentice for the entire six months. Also, your apprentices don’t have to work with you for six months continuously
business premises test
Business premises test

You’ll pass the business premises test in an income year if you answer ‘yes’ to all parts of the following question.

At all times in the income year, were your business premises:

  • owned or leased by you
  • used for personal services work more than 50% of the time
  • used exclusively by you
  • physically separate from your residence and your associates’ residences
  • physically separate from the business addresses of clients and their associates
business premises test44
Business Premises Test
  • Two common examples that don’t pass the business premises test are:
  • a home office as this not considered physically separate from your residence
  • an office jointly leased with another person/business entity, as neither lessees have exclusive use of the premises.
workers compensation work cover
Workers Compensation (Work Cover)

Who are deemed Employees?

workers compensation work cover47
Workers Compensation (Work Cover)

Who are deemed Employees?

workers compensation work cover48
Workers Compensation (Work Cover)

Who are deemed Employees?

workers compensation work cover49
Workers Compensation (Work Cover)

Who are deemed Employees?

eligible employees
Eligible Employees
  • Aged 18 to 69
  • Earn more than $450 per month
  • If <18 earns > $450 works > 30 hours per week
self employed
Self Employed
  • No legal requirements to pay superannuation for yourself
  • If you work for your own company, you are an employee of that company and must pay yourself superannuation.
payroll systems
Payroll Systems
  • In house systems
    • Purpose Made (These are Suited to large Companies)
      • Chris 21
      • Oracle
      • SAP
      • Micropay
payroll systems60
Payroll Systems
  • Combination Accounting & Payroll
    • Purpose Made (These are Suited small business)
      • MYOB
      • Quickbooks
payroll systems61
Payroll Systems
  • Outsourced Payroll
    • Subcontracted Out to Specialist Companies
      • ADP Employer Services
      • Talent 2
payroll systems62
Payroll Systems
  • Paper Systems
    • From Officeworks etc
      • Provide a written format to record Payroll information
payroll items
Payroll Items
  • Earnings – Reward for Effort
    • Eg Carpenter pay rate is $21 for Carpentry Work
payroll items64
Payroll Items
  • Entitlements – Benefits that are derived because employment
    • Annual leave
    • Sick Pay
    • Bereavement Leave
    • Public Holidays
    • Superannuation
    • Redundacy
payroll items65
Payroll Items
  • Allowance – Payment above Earnings to accommodate for special or harsh conditions
    • Height Allowance
    • Site Allowance
    • Living Away From Home Allowance
    • Confined Space
    • See Hand Out
payroll items66
Payroll Items
  • Deductions – Moneys subtracted from Gross Pay to determine Nett pay
    • Taxation
    • Salary Sacrifice Superannuation
    • Union Fees
    • Child Support
    • Allotments
definition on costs
Definition - On Costs
  • Entitlements & Allowances will be On Costs
employees wages conditions
Employees Wages & Conditions
  • Normal working hours will be determined by the award
  • Cl 27.1
  • Work out of these hours is considered overtime Cl 29.1
method of wage payments
Method of Wage Payments
  • Cash
  • Direct Deposit
  • Cheque
    • Most Awards Require that paid time be allowed to deposit the cheque to the Bank Account
other allowance
Other Allowance
  • See Payment Summary Sheet