The 7 Key Checkmarks for Compliant Employee Onboarding

Over the past 15 years, the workplace has become a very transient place. Each generation has become a little less loyal to their employer and a bit more self-ambitious. From baby boomers who were grateful to have a job for life, to Gen X who expected career rewards for hard work and loyalty, ending up with Gen Y and Millennials who see every workplace as a stepping stone for their next career move.

The post-COVID-19 economy, which showed the smallest percentage of unemployment in Australia, further increased the culture of a transient workplace, reducing the general commitment to the same workplace down to an average of 18 months.

Even small businesses are feeling the very expensive effects of this new culture, having to deal with continuous recruitment and training of new staff members.

The task of finding and retaining new talent is spread across 4 key areas:

1. A solid recruitment process, which includes:
   • making sure the job advertisement stands out from the competition and is visible to as many candidates as possible;
   • a fast and efficient candidate selection approach;
   • a simple and effective interview strategy;
2. Proper and compliant onboarding procedures, including:
   • the preparation and issue of a comprehensive employment agreement;
   • the provision of employment forms that ensure compliance with Government standards and requirements;
   • a seamless way to gather all relevant employment information to ensure the employee can be paid correctly and on time;
3. An effective orientation and training plan, including:
   • sharing company core values and key objectives;
   • formal and informal training on both the employee’s position and related industry;
4. A solid incentive-based retention plan that includes:
   • a clear career progression path;
   • ongoing feedback and incentives;
   • continuous involvement in the company’s culture;

Companies of all sizes should seek either internal or external support to ensure each of these four key areas is correctly implemented in the workplace.

As our expertise lies with Payroll compliance, this blog article focuses on the ability to implement correct and compliant onboarding procedures by listing the 7 key onboarding tasks that every employer should implement to ensure their onboarding process is fully compliant with Government requirements.

  1. Employment Contracts/Agreements

Fair Work Australia defines an Employment Contract as an agreement between an employer and employee that sets out the terms and conditions of employment. It also acknowledges that Employment Agreements can be both written and verbal.

There is a lot of misconception, particularly amongst small businesses, of what an Employment Agreement actually is.

Employment engagement may include:

• the Employment Agreement;
• a Letter of Offer, and
• Terms & Conditions of employment

Employment Agreements

There are three types of Employment Agreements:

Fair Work Awards

A modern Award is a legal document that sets out the minimum conditions of employment (including the minimum pay rates) for a specific industry sector.

Awards apply to both employers and employees depending on the industry they work in and the type of job worked.

Every award includes:

• a coverage clause that lists the type of businesses and occupations covered by the Award, and
• job classifications, a list of job descriptions that help employers identify the pay scale applicable to an employee.

An Award may cover the entire employer’s workforce or a part of it.

For example, a plumbing company may have all of its plumbers classified under the Plumbing and Sprinklers Award and its admin team under the Clerks Award.

Other Awards, instead, include classifications for both labour and admin duties. For example, the Animal Care Award includes classifications for veterinarians, vet nurses, animal care assistants and receptionists, reducing the likelihood of having employees classified under multiple Awards within the same workplace.

When employees are classified under an Award, their Employment Agreement is the Award. This also applies when employees are paid above the minimum Award rates, as paying an employee above Award doesn’t exempt the employer from other rights and obligations set out by the Award.

As Awards often cover more than one business type and several employee classifications, the employer should include a Letter of Offer detailing the employee classification, pay rates, and employment conditions applicable to the new hire.

It is important to highlight that it is a legal requirement that the employees’ classification be displayed on their payslip.

There is no obligation for the Employer to provide a copy of the Award, as Awards are publicly available on the Fair Work website.

Enterprise Agreements

An Enterprise Agreement (or Enterprise Bargaining Agreement – EBA) is an agreement made at the enterprise level that contains the terms and conditions of employment for all or some employees employed by a specific entity or multiple grouped entities.

The starting point of all Enterprise Agreements is the relevant Industry Award applicable to the Employer.

Enterprise Agreements must be approved by Fair Work, and the key approval condition is that they satisfy the BOOT Test (Better Off On all Terms), where the employee must receive better employment rights and conditions than the terms stipulated by the relevant Award.

Enterprise Agreements have a maximum length of 4 years. Once expired, a new Enterprise Agreement must be written and submitted to the Fair Work Commission for Approval.

More information on Enterprise Agreements can be found on the Fair Work website.

When a business with an active Enterprise Agreement hires a new employee, the Employment Agreement is the Enterprise Agreement. A copy of the Enterprise Agreement should be provided to the employee, together with a Letter of Offer that outlines the employee classification, the applicable pay rates and employment conditions.

This also applies when the employer chooses to pay an employee higher rates than those stipulated in the Enterprise Agreement, as other conditions of employment stipulated in the Enterprise Agreement still apply.

Private Employment Agreements

Private Employment Agreements apply to employees who cannot be classified by one of the 122 Industry Awards (deemed as Award-free employees) or to Annual Salary employees.

However, all Annual Salary employees paid up to $150,000 per annum are not fully exempt from employment conditions stipulated by their Industry Award.

Employers who hire employees on Private Agreements must provide an employment agreement tailored to the pay and terms and conditions negotiated with such employees. These agreements can also be made verbally at the mutual risk of both employer and employee when disputes over employment terms and conditions arise.

Letter of Offer

A letter of Offer is a document that confirms the pay rate or Annual Salary and other terms and conditions of employment that specifically apply to the new hire.

Although there is no legality involved, a Letter of Offer should always be given to employees hired under an Award or Enterprise Agreement that details the specific employment classification and applicable pay rates (inclusive of allowances, shift rates and overtime) and the length of the probation period.

A Letter of Offer may also include other benefits provided to the employee, such as motor vehicles, smartphones, laptops, etc.

When employees are hired under a Private Employment Agreement, the Letter of Offer is generally superfluous, as the Private Agreement should already include all the elements normally detailed in the Letter of Offer.

Terms and Conditions of Employment

This document outlines additional terms and conditions of employment that don’t necessarily relate to the employee’s pay or core employment conditions. These may include non-compete clauses, privacy and confidentiality requirements, intellectual property, conflict of interest, etc.

Terms and Conditions of Employment documents may also include a brief summary of core employment policies (i.e. Annual Leave, Occupation Health and Safety, sexual harassment, etc.).

This document can also be provided after the employment has started. Once again, there is no specific legal requirement in Australia on what information to provide in writing as part of the employment process. However, full transparency at the start of employment is always recommended in order to avoid future issues.

2. Tax and Super Information

The ATO requires all Australian Employers to gather both tax and superannuation information from new employees and submit it to the Tax Office.

Prior to the implementation of the second phase of Single Touch Payroll, the ATO required employers to have their new hires complete a Tax File Declaration Form and a Super Choice Form. The Employer was then required to send the Tax File Declaration form to the ATO.

With the roll-out of the second phase of Single Touch Payroll, the ATO fully digitised its onboarding process. The Tax File Number Declaration form is no longer available for download from the ATO website.

New employment information is submitted electronically to the ATO every time the employer submits the STP event on payday.

However, employers must still be able to prove that the tax and super information they submitted to the Tax Office via STP has been provided by the employee.

This means employers still need a way to gather this information from their employees, leaving them with the following options:

1. Continue to use the original ATO forms and manually key the information in their payroll system;
2. Invest in an onboarding software application. With ample choices available, employers should look at one that integrates with their payroll system to avoid data double-entry. Some of the most popular apps are Canyou, TANDA, Deputy and Employment Hero Pay, which all integrate with Xero, MYOB and Quickbooks;
3. Collect new employee data via either a manual or an online form (using popular online form software like Google Forms or Typeform);
4. Request their new employee to submit their Tax and Super information to the ATO via their MyGov account. In this instance, the employer will need to provide the new hire with their ABN and default Employer Unique Superannuation Identifier (USI);
   Once the employee has submitted the online employment forms to the ATO, he/she should print out the forms from MyGov and hand them over to the employer.

Employers should select the most appropriate option for their business based on their employees’ average technical, literacy, and language skills.

Employees have 28 days to submit their tax and superannuation information to their employer.

When an employee fails to provide this information on time, the employer is required to:

• set the employee tax scale to the Non-resident option (47% tax on all gross wages);
• submit a Stapled Superannuation Contribution Request via ATO Online Service to identify the default Super Fund allocated to the employee by the Tax Office. In the instance the employee does not have a stapled fund, the employer should create a new Super Fund account using their Employer Default Superfund.

3. Additional Employee Information

A key part of the employee onboarding process is allowing the employee to provide the core information required to set them up and pay them correctly.

Additional information that is not already included in the Tax File Declaration and Superannuation Choice forms, include:

• Phone number and email address (mandatory by Single Touch Payroll);
• Gender (mandatory by Single Touch Payroll);
• Emergency Contact Details (mandatory by the Workers Compensation Act);
• Bank Account details.

Employers should implement an easy and efficient way to collect all the above details together with the Tax and Super information.

 4.  Work Eligibility Documents

The responsibility of providing the correct Tax information to the ATO falls on the employee.

Employers are not allowed to question the information provided on their tax forms by their new employees. They can answer queries about the meaning of the questions asked on employment and tax forms, but they cannot advise their employee of what the correct answers to these questions may be.

The same applies to Superannuation choice; employers are restricted from answering queries beyond the meaning of the questions on the form. They cannot provide recommendations on whether a choice of a Superannuation fund is better than another, as this constitutes Financial Advice, which an employer is not licensed to provide.

When an employee provides incorrect tax information to the ATO, the employer must demonstrate that the Tax information declared to the ATO via Single Touch Payroll was the information originally provided by the employee on their forms. Once they are able to prove this, the employee will be directly liable for back payments and fines.

However, it is the responsibility of the employer to verify the employee’s eligibility to work in Australia.

There are serious consequences for employers who hire employees who do not have working rights in Australia or ask them to breach the working restrictions set out by their visa.

When discovering the engagement of illegal workers, the Department of Home Affairs can:

• issue of an Illegal Worker Warning Notice (IWWN) on the first offence;
• issue infringement notices on subsequent offences;
• initiate court proceedings for higher civil penalties;
• initiate court proceedings for criminal acts (which can escalate to up to two years imprisonment);
• initiate court proceedings for aggravated offences (when the employment escalates to forced labour, sexual servitude or slavery, which includes criminal penalties of up to five years imprisonment).

To avoid sanctions and penalties, Employers should always request documents that prove the employee’s eligibility to work in Australia as part of their employee onboarding process:

These documents include:

• For Australian and New Zealand citizens: a copy of the employee’s Passport, Birth Certificate or Citizenship Certificate;
• For Australian and New Zealand Permanent Residents: a copy of their Permanent Residency documents;
• For people who have Australian working visas, a copy of their visa.

Note: Employers are also responsible for determining the correct residency status for Tax purposes based on the Visa provided by the employee and becoming aware of any work restrictions as stipulated by the relevant visa.

Employers can check all these details by registering with VEVO (Visa Entitlement Verification Online) and performing online checks for all their new Visa Holders employees.

5. Licenses and Certification

Another essential task of employee onboarding is obtaining copies of licenses and educational certifications, particularly when those are essential to performing a job.

Imagine if a hospital did not check that their newly hired doctors are actually doctors! The same principle applies to other trades and professions.

License requirements vary from job to job. Some of the most common ones are:

• Car Driver’s License;
• Truck Driver’s Licenses (MR, Medium Rigid, HR Heavy Rigid, HC Heavy Combination and MC Multi Combination);
• Forklift License;
• Responsible Service of Alcohol;
• White Card;
• Working with Children Certificate;
• First Aid Certificate.

Obtaining Educational and Trade Certificates is also a key aspect of employee onboarding.

Insurance companies may refuse to pay claims when work was performed by a person who does not hold the proper qualifications and registrations for a job or trade, which the employer omitted to check at the time they hired the employee.

6. Fair Work Information Statements

The final compliance requirement for employee onboarding is the provision of Fair Work Information Statements to all new employees.

Fair Work Information Statements are documents that provide a summary of the core employment rights available to Australian Employees.

Fair Work requires all employers to hand over all applicable Fair Work Information Statements to new employees based on their employment basis.

As the right to receive the Fair Work Information Statements is one of the National Employment Standards, failure to provide such documents to new employees is considered one of the most serious breaches by Fair Work, and it attracts penalties of up to $7,000 per missing document, per employee.

Currently, there are three types of Fair Work Information Statements. These are:

• The Fair Work Information Statement (FWIS): this must be provided to all new employees;
• The Casual Employment Information Statement (CEIS): this must be provided to all new casual employees;
• The Fixed Term Contract Information Statement (FTCIS): this must be provided to all new employees engaged on a fixed-term contract.

An employee may be entitled to receive just the Fair Work Information Statement (FWIS) or all of the above documents, depending on their engagement.

For example, David Jones hires an employee as a casual worker for two months to cover the Christmas period.

As this employee is hired on a casual basis and for a defined period, David Jones must provide the new employee with all three Fair Work Information Statements.

 7. Occupational Health & Safety

The first week of an employee’s new job should be all about allowing them to settle into their new work environment.

Common activities should include team meetings, training, presentations of company culture and core values, and learning new systems.

However, a core compliance task to complete during the first week of employment is training on Occupational Health and Safety regulations.

Occupational Health and Safety regulations vary significantly from state and territory and from job to job.

All employees, including office staff and remote workers, should receive an induction to Occupational Health and Safety regulations in the workplace tailored to their job duties.

Some examples include:

• Employees working in an office must be shown the location of the Emergency exits;
• Remote Office workers should be provided with First Aid Kids to keep at their desks;
• Warehouse Staff should be shown the correct way to lift heavy boxes and safety precautions in using equipment and machinery;
• Tradesmen should be provided with the correct PPE equipment.

No matter the size of the business or the job type, Occupational Health & Safety regulations still apply.

Employers should first consult with an OH&S expert and design proper onboarding processes that cater to their work environment and job requirements.

Key Takeaways and Tips for Employers

Engaging and retaining new talent goes beyond incentive-based plans, attractive salaries and fun activities.

At the core of hiring a new employee is compliance with Government Regulations.

These regulations include:

• Verifying employees’ eligibility to work in Australia;
• Obtaining copies of their licenses and certifications to ensure they are qualified to perform the job they applied for;
• Gathering all required information to pay their wages and entitlements without delays;
• Collecting tax and superannuation information;
• Ensuring proper Employment Agreements and documentation are sighted and signed;
• Providing employees with the applicable Fair Work Information Statements;
• Training employees in the relevant Occupational Health & Safety regulations.

Any breach of compliance regulations may result in warnings, penalties or even incarceration for employers.

Small Business employers who do not have the financial resources to employ internal HR and Payroll specialists should seek support from external consultants to help them design a seamless and compliant onboarding process and a proper Occupational Health and Safety Induction.

At Evolution Cloud Accounting, we have created both paper-based and paperless Onboarding Processes suitable for small business employers.

This is a key aspect of setting up a Payroll system for all our clients.

These processes have ensured that all compliance regulations are achieved whilst also saving time in obtaining and providing all documents required to successfully onboard new employees.

Contact us for more information.

References

https://ablis.business.gov.au/service/ag/fair-work-information-statement/348

https://www.fairwork.gov.au/employment-conditions/national-employment-standards

https://www.fwc.gov.au/agreements-awards/awards/difference-between-awards-and-agreements

https://immi.homeaffairs.gov.au/visas/working-in-australia/work-rights-and-exploitation

https://immi.homeaffairs.gov.au/visas/employing-and-sponsoring-someone/hire-someone-in-australia

https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/single-touch-payroll/single-touch-payroll-for-employees/new-employees