Are payslips a legal requirement?
Yes, payslips are mandatory under Fair Work. All employees must be issued with a payslip at every pay event, regardless of how much time has been worked.
It is compulsory for business owners to issue payslips within 1 working day of paying employees. Fair Work inspectors can give employers a fine, called an infringement notice. For example, infringement notices can be issued for payslips that are false, misleading or exclude relevant information.
Employers can also be penalised if Fair Work chooses to take a matter to court. In some cases, employers who have not given payslips may have to prove to a court that they didn’t underpay an employee.
What information should I include on a payslip?
Your payslip set up is likely compliant if you are using quality payroll software in your hospitality business (e.g. Xero, Quickbooks, MYOB, Keypay etc). However, we suggest you check your software meets the minimum payslip legal requirements. Alternatively, your BAS Agent bookkeeper can check or set it up for you.
Payslips must cover details of an employee’s pay for each pay period. The compulsory details to include on each payslip are:
- Employer’s and employee’s name
- Employer’s Australian Business Number (if applicable)
- Pay period
- Date of payment
- Gross and net pay
- If the employee is paid an hourly rate:
- The ordinary hourly rate
- The number of hours worked at that rate
- The total dollar amount of pay at that rate
- Any loadings (including casual loading), allowances, bonuses, incentive-based payments, penalty rates or other paid entitlements. These are separated out from an employee’s ordinary hourly rate. For example, a note could be included on a payslip that the hourly rate incorporates the relevant casual loading.
- The pay rate that applied on the last day of employment
- Any deductions from the employee’s pay, including:
- The amount and details of each deduction
- The name, or name and number, of the fund or account the deduction was paid into
- Any superannuation contributions paid for the employee’s benefit, including:
- The value of contributions made during the pay period (or the value of contributions that need to be made)
- The name and/or number of the superannuation fund the contributions were made to
Having trouble understanding which award is right for your employees? Read our tips HERE.
Are Leave balances compulsory on payslips?
No, they’re not. There is no Fair Work requirement to include any accrued leave balances on payslips. However, it is best practice to do so. If an employee asks for information about their leave balances, you must provide it immediately. As a result, we recommend that you include accrued balances on payslips for convenience sake.
What about casuals?
Casual employees are the most common type of employee in hospitality. It’s compulsory for payslips to clearly list the break-down of different work rates. You can’t bundle allowances and loadings into one hourly rate. Fair Work requires payslip clarity for the employee.
Therefore, we suggest you also have a written agreement when starting each employee. The agreement should explicitly state their base rate of pay and any allowances or pay component entitlements. The compulsory rate and notes on the payslip should directly correspond to the information on the agreement.
- Give electronic pay slips to each worker, such as via email or into an electronic personal account (employers should not simply store them on a database)
- Issue electronic pay slips in an easily printable format
By way of best practice, employers should:
- Securely and confidentially issue electronic pay slips to employees
- Ensure that employees can access and print their electronic payslips in private. For instance, it would be inappropriate to issue an electronic payslip to an employee who doesn’t have access to a computer to privately read or print their payslip
Fair Work may issue infringement notices or fines for failure to meet mandatory employee record-keeping requirements. Similarly, notices or fines can be issued for failing to make records available for inspection. Fair Work infringement notices and fines range from $1,260 to $6,300. Further, penalties range from $12,000 to $630,000 if an infringement matter goes to court.
Have a chat with your employees!
We suggest you make payroll a welcome and open discussion with employees. Payroll and employees are a critical part of hospitality businesses, so be confident in your processes and decisions. Importantly, individual employee rates and conditions must remain confidential to each employee. However, you can create a healthy culture where you welcome payroll questions. You have nothing to worry about if you can refer back to awards and Fair Work conditions. In other words, be open and fair so you and your employees can rest easy.
Payslips are easy to prepare and issue via quality accounting software. The basic steps above will help you avoid a call from Fair Work or confused employees. Likewise, have a chat with a BAS Agent bookkeeper. A BAS Agent can get you set up and systemised for a compliant payroll experience.
To sum up your payslip obligations, see the free Fair Work download HERE.
Did you know that Single Touch Payroll is compulsory for all business as of 1 July 2019? Don’t be caught out! Read how to set up STP in your business HERE.
Mise en place!