Payroll Updates for Employers: November 2018

Below are three key payroll updates for employers to be aware of and action where relevant:

    Update 1: Long Service Leave Act 2018 (Vic)
    This Act is now in effect and impacts employers and employees in Victoria with changes in how Long Service Leave (LSL) is accrued and when and how it can be taken.

    For full details on these changes, see our previous blog Amendments passed on Long Service Leave legislation in Victoria with imminent effect.

    Update 2: Casual Conversion Clause in Modern Awards
    The Fair Work Commission is obliged to conduct reviews of modern awards every four years. As a result of the reviews conducted in 2017 all Modern Awards have been updated as at 1 October 2018 to include a casual conversion clause.

    In broad terms, this means that persons who have been employed on a casual basis have an ongoing right to request their employment is converted to part time or full time status, provided that:

      1. The employee has been working for the employer for at least 12 months
      2. The employee has over the last 12 months been working a regular pattern of hours which they could continue to work as a full time or part time employee without any major changes.

    Such a request must be submitted in writing to the employer, who may:

      1. Approve the request, after discussion with the employee, in which case it would be documented and take effect from the start of the next pay cycle
      2. Reject a request, where they have consulted with the employee and reasonable grounds exist – for example it might be reasonably foreseeable that the hours will significantly change. Again, this must be documented.

    For further details about Casual Conversion Clauses, this article by Madgwicks Lawyers is helpful:
    https://www.madgwicks.com.au/thought-leadership/casual-conversion-changes-from-1-october-2018/

    Update 3: Instant Payments
    This is a movement to be aware of in the payroll sphere and maybe considering whether it is something you want to be able to provide to your employees in the future. It is about employees being able to access their earned wages before your organisations payday and is gaining beginning to gain traction globally.

    In December 2017 Walmart attracted media attention when it provided its 1.4 million employees with an app called InstaPay that they can use to access wages for hours they have worked prior to the next pay cycle (see https://www.businessoffashion.com/articles/news-analysis/walmart-gives-workers-app-to-get-paid-earlier).

    The basics of how such a service operates is as follows:

      1. A service provider offering an instant payment service (eg InstaPay) is linked to employee self-service portals
      2. An employee can use the service to request an advance on their next pay cycle based on approved timesheets or salary in arrears at the time of the pay date
      3. The service provider pays an advance (instantly, or on the same day)to the employee (this is from service providers funds, not from the employers) and charges a nominal fee to the employee for the service; at the same time a one-off deduction is set up in the payroll software for the total of the advance plus the fee to be paid to the service provider in the next pay run, reducing the actual payment to the employee accordingly.

    It is important to understand that the service provider is in charge of the relationship for the advance. There is no extra work for the employer in having to consider requests for advances or manage the payroll to ensure future pay is reduced accordingly or the advance otherwise recovered. Also, there are constraints in place so an employee can only withdraw up to a certain amount per week or up to say 50% of their total income for the week.

    Instant payments are also about helping employees meet unexpected expenses outside of payday loans which can be exhorbitant to repay, or credit cards. ABC News reported that “a $300 payday loan with a four-month repayment period will cost a borrower $408 to repay in full… an average credit card with an 18 per cent interest rate costs $305 to repay over the same period.” Or, just pay $2 for an InstaPay advance.

    If this is of current interest to you, there is one payroll software provider in Australia, Employment Hero, who has recently opened up this capacity; employers must be using their HR services and either HeroPay, Intuit’s Payroll and KeyPay services.

If you have any questions about how these payroll updates may affect your business please call us on 03 5339 3200 or contact us here.

Thanks for reading.

By Genna Kidd

The information contained on this website has been provided as general advice only.  The contents have been prepared without taking account of your personal objectives, financial situation or needs.  You should, before you make any decision regarding any information, strategies or products mentioned on this website, consult your own financial advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs.

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