Some businesses pay their wages to some or all of their employees as “cash in hand” or “off the books” rather than to a nominated bank account. This can be an acceptable way of receiving pay, so long as employers provide a pay slip that sets out the earnings for the period and the amount of tax withheld, as well as ensuring superannuation contributions are still being paid.
The so-called cash economy is common among small businesses, such as restaurants, cafes and home cleaning businesses. Some businesses pay in cash to avoid paying their employees entitlements such as superannuation and public holiday and weekend penalty rates. Employees who earn more than $450 per month before tax are entitled to receive superannuation payments if they are 18 years of age or over. If the employee is under 18 years old but work more than 30 hours a week, they must also receive super payments. An employer is required to pay 9.5% of the value of the ordinary time earnings into the super fund.
Whether you had paid in cash or via electronic bank transfer, your employer must provide a payslip to you within one day of receiving pay. Your payslip must set out the amount of pay, both gross and net (before and after tax), super contributions, the pay period and the date of receiving the pay. If any entitlements (such as penalties, bonuses or leadings) or deductions apply, they should also be included on the payslip. It is also necessary to include the employer’s name, ABN and the employee’s name.
At the end of the year, employees must receive a payment summary (or group certificate) that includes information about the full earnings for the year and the total amount of tax deducted. This payment slip will include information about the total income earned, the total amount of tax withheld and super contributions.
Risks of Being Paid Wages in Cash in Hand
As an employee, being paid wages in cash may be more convenient for you. However, you should ensure that you are not being paid less than the correct award wages relevant to your industry. Moreover, you should check that your super contributions are still being paid to your super fund. In the case of injuries that take place at work, you may not be covered by workers compensation insurance.
Being off-the-books can also significantly impact young people, especially those working in industries less likely to be unionised. Young people should confirm with their employer that they are receiving pay that reflects applicable penalty rates and superannuation, as well as annual leave and sick leave entitlements.
As an employee, you do not have to accept an employer’s offer of paying you in cash. You can ask to be paid by electronic bank transfer. If you are an employee that receives cash for pay and does not receive a payslip, there is a risk that the employer is not meeting their legal obligations and may be evading tax. If you have any questions about your employment contract or require legal advice about an employment matter, get in touch with our employment team by calling us on 1300 544 755 or filling out the form on this page.