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Hiring your first employee can be a daunting challenge. The whole hiring process is difficult enough, but working out the legal requirements surrounding pay and employee benefits can be quite confusing. Australian employment law requires employers to provide different employee benefits and breaching these legal requirements is serious. This article will set out the most important benefits you must provide to your staff.

1.   Salary

Clearly, you need to pay your staff. However, the amount you are required to pay them will depend on a number of factors.

Firstly, you need to pay your staff a minimum wage. You can quickly check what the minimum wage is by perusing the Fair Work Ombudsman’s website.

Beyond the minimum wage, employers and employees are free to agree on a salary as long as the salary is in compliance with the Fair Work Act, which governs employment law in Australia. The Fair Work Act set up the Fair Work Commission, a body whose key role is to set awards. An award sets out the minimum terms and conditions of employment of particular types of employees. It also sets out any legally binding minimum terms. An award generally applies to employees in each industry or occupation. If your employee is covered by an award, you will need to pay them at least the amount set out in the relevant award. In order to work out if your employee is covered by an award, use the ‘Award Finder’ on the Fair Work Ombudsman website.

If you determine that a particular employee will be covered by an award, note down the:

  • details of the award;
  • award’s classification; and
  • minimum salary you must pay

You will need to include these details for the Employment Contract.

2.   Superannuation

Superannuation is money that is set aside during your working life and invested by the superannuation fund. Subsequently, the money in the fund provides savings for your retirement. The law requires employers to make superannuation contributions for most of their employees. This contribution must be at least 9% of your ordinary earnings (up to certain limits).

Most employers make these superannuation contributions to a particular superannuation fund, known as a default fund.  However, you will likely be able to notify your employer if you wish for your superannuation contributions to be made into another fund of your choice. This is done by completing a Standard Choice Form.

3.   Annual Leave and Sick Leave

Under Australian law, all employees (except casual employees) must be paid annual leave in accordance with their ordinary hours of work. Generally, employers must pay employees for four weeks of annual leave per year. However, certain occupations require for employers to provide five weeks. The Fair Work Ombudsman provides a leave calculator, which can assist you in working out the exact entitlement.

However, part-time employees will only be entitled to a pro-rata amount of annual leave. Pro-rata means that your employer will calculate the leave in proportion to the number of hours that you have accrued over time.

Full-time employees are also entitled to ten days paid personal leave (for sick and paid carer’s leave) per year. Again, part-time employees receive this per a pro-rata amount.

4.   Parental Leave

Employees get unpaid parental leave when a new child is born or adopted. Parental leave includes:

  • maternity leave, for mums;
  • paternity leave, for dads and partners; and
  • adoption leave, for both adoptive parents.

The minimum entitlements to parental leave apply to all employees in Australia.

Employees can also have extra entitlements, such as paid parental leave, under an award, agreement, company policy or another law These entitlements can’t be less than the entitlements in the National Employment Standards.

5.   Long Service Leave

Long service leave is a period of paid leave that all employees are entitled to if they have been working for the same business for a long period of time. The legal requirements for long service leave vary between each state and territory, so you should check your relevant laws if you have been working at a company for over five years.

For example, in New South Wales (NSW), you are entitled to two months paid leave if you have been continuously working for the same employer for ten years.

In each state, you can generally only take long service leave after ten years of continuous service, so it’s becoming less common.

Key Takeaways

Hiring employees is one of the most important steps when starting a company. You want to make sure that you are working with people who are right for the job. However, you must also ensure that you meeting all your legal requirements as an employer. These requirements include paying:

  • salary;
  • superannuation;
  • annual and sick leave;
  • parental leave; and
  • long service leave.

If you have any questions about your legal responsibilities as an employer, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.


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