According to the Fair Work Act 2009 - Section 536, employers have an obligation to provide a payslip to all employees.
Payslips should be provided to employees every time a payment is made and within one working day of payment.
What is a Payslip?
A payslip is a document detailing the salary or pay that an employee receives for the services rendered to the employer under the contract of service.
What is an Itemised Payslip?
An itemised payslip is a payment slip that sets out what an employee’s pay consists of.
Under the Employment Act, all employees have to be provided with an itemised payslip every time an employer makes a payment.
If an employer is unable to provide an employee with an itemised payslip at the time of payment, they have three working days to do so from the date of payment.
An itemised payslip can be provided either as a digital or hard copy or a handwritten payslip.
Providing itemised payslips to the employees is a great HR practice as it also makes employees aware of what constitutes their salary. Itemised payslips ensure your payroll is compliant with ATO regulations and can assist in resolving salary disputes (if any).
Frequency of Paying Salary
As mentioned above, itemised payslips are issued to the employees at the time of payment. It is therefore important to understand how often you should be issuing a salary to employees.
According to The Fair Work Commission, as an employer, you need to pay employees their salary at least once a month. Accordingly, the salary must be paid within seven days after the end of the salary period, along with the payment slip (which needs to be generated within 24hrs of payment).
In instances where an employer may choose to pay their employees’ salary at shorter intervals (for example, on a fortnightly or weekly basis) there would be more than one salary period within a particular month. In this instance, you may consolidate all the salary payment details for your payroll in respect of that calendar month into a single itemised payslip.
These payslips can be provided on the day you pay your employees. Alternatively, an employee’s final salary payment day may vary. This may depend on the following:
|Situation||When to pay Final Salary?|
|When an employee resigns and completes the requisite notice period||Last day of employment|
|When an employee resigns suddenly and does not serve a notice period||Within 7 days of the last day of employment (this is the award for most businesses in Australia)|
|When the employee is dismissed due to misconduct||Last day of employment. If payment of salary is not possible on the last day of employment, then it must be paid within 3 working days of dismissal.|
|When the employer terminates the contract||On the last day of employment. If payment of salary is not possible on the last day of employment, then it must be paid within 3 working days of termination.|
In all the above cases, an itemised payslip must be issued on the day that the dismissal or termination payment is made to the employee.
Maintaining Payslip Records
In Australia, you are legally required to keep the following employment records for seven years:
- Employee details such as pay, leave and hours of work
- Reimbursements of work-related expenses
- Workers compensation for each employee
- Superannuation contributions
What are the Components of an Itemised Payslip in Australia?
An itemised payslip must contain the following items, according to the Fair Work Commission, where relevant:
- Employer's name
- Employer's ABN (if any)
- Employee's name
- Date of payment
- Pay period
- Gross and net amount of payment
- Any loadings, including holiday pay, sick leave and overtime hours
- Incentive-based payments
- Penalty rates
- Entitlement payments
A payslip must also include the following, where relevant:
- Hourly pay rate and the number of hours worked
- Annual salary
- Deductions made
- Superannuation contributions
Keeping Track of Payslips
To keep track of payslips, it is advisable to invest in a quality payslips software such as Quickbooks Payroll powered by Employment Hero, that allows you to create payslips to suit your business and captures all your payroll information in real-time. This can include gross pay over a particular pay period, penalty rates and income tax capabilities.
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