Paid Parental Leave Changes from 1 July 2011

Understand your obligations

From 1 July 2011, employers now act as “paymasters” whereby the Government provides the employer with funds which are to be distributed to the eligible employee for paid parental leave entitlements.

Employers are required to make paid parental leave payments on each regular payday for that employee if they are paid on a monthly basis. For employees who would not normally receive monthly pay, employers must make fortnightly payments. Employers are required to withhold PAYG tax from each payment.

Note: There is no provision for superannuation in the legislation and employers are not expected to make contributions to their employee’s superannuation fund.

Employees do not accrue annual leave entitlements during this period of leave. However, employers that already have a paid parental leave scheme cannot replace it with the Government’s – an employee already entitled to an employer-funded paid parental leave scheme will also receive their entitlements from the Government.

More information is available at the Family Assistance Office website http://www.familyassist.gov.au/

Know your employee’s eligibility

Employees include casual workers as well as contractors and the self employed. Employees will be eligible to receive paid parental leave entitlements provided they have:

• worked at least one day per week for 10 of the 13 months before the birth or adoption of their child

• Australian residency

• made a claim for paid parental leave (that is, it is not an automatic entitlement)

• given birth or adopted no earlier than 1 January 2011

• the role as primary care giver of the child

• not have worked between the date of birth/adoption and their nominated start date for paid parental leave; and

• earned less than $150,000 adjusted taxable income in the financial year prior to the date of birth/adoption (this includes base rate of pay, bonus, foreign income and income earned from assets like shares or property). This is a flat income test that is not calculated on a pro-rata basis for employees who are not full time

It is probably a good idea to review your existing employer contracts and company policies to determine how the new legislation will be integrated with current schemes.

Provide necessary details to the Family Assistance Officer

Register your organisation (information available at http://www.familyassist.gov.au) and ensure the necessary systems are in place internally to process payments from 1 July.

This will ensure that you (the employer) will receive the required Government funds in advance of making PPL payments to your employee in your usual payroll cycle.

Keep appropriate records

Records must be kept of all funds received from the Commonwealth Government and their subsequent distribution to employees.

Communicate with your employees

Maintain effective communication to minimise confusion about employee entitlements and eligibility.

For more information on managing this process through HR outsourcing and HR consultancy, contact Annette Dixon at End2End Business Solutions www.end2endbusinesssolutions.com.au

Changes to the Superannuation Contribution Caps

The superannuation guarantee requires employers to contribute at least 9% of an employee’s “ordinary time earnings” per quarter to a maximum super contribution base of $42,220 per quarter. This is indexed. For the quarter starting 1 July the maximum super contribution base will be $43,820.
Contributions for the quarter ending 30 June 2011 must be made to the employee’s fund by 28 July to avoid a superannuation guarantee charge.

Concessional superannuation contributions (employer contributions meeting the superannuation guarantee, award or agreement obligations; employee salary sacrifice contributions and government co-contributions for low income employees) are taxed on entry to the fund. Concessional contributions are also capped and contributions in excess of the cap are taxed much more heavily.

In 2009 the government reduced the caps to $25,000 and $50,000 for employees who are 50 and over. The $25,000 cap for employees under 50 is indexed. However, the increase to the indexing factor, which is used, is not great enough to move the cap, which remains at $25,000 for contributions made from 1 July 2011 until 30 June 2012. The $50,000 cap for employees 50 and over is not indexed and remains at $50,000.

Reportable Employer Superannuation Contributions (RESC) comprise employer contributions which can be influenced by the employee (including the employee’s sacrifice contributions), but not employer contributions to meet the superannuation guarantee, or obligations under an award or enterprise agreement. RESCs made for the year ending 30 June 2011 must be included in the employee’s payment summary for 2010-2011.

For further information on human resource consultancy and outsourcing, or to sign up to our bi-monthly newsletter on the latest HR industry updates, visit www.end2endbusinesssolutions.com.au.

Human Resource Issues: The Failure of Corporate Wellness Programs To Increase Productivity

There are a number of human resource issues that most companies’ take for granted and one of it, believe it or not would be the wellness of employees, including weight gain and mental illness.

It might sound odd that issues like this should have a place in a company’ problem solving think tank but it does. Many companies all over Australia have been seeing the increase in the average weight of its workers because of sedentary jobs, bad nutrition, and lack of support for health related matters.

As a result companies have seen a rise in absenteeism, as employees take time off work due to sickness. Of course when talking about productivity, these kind of problems have even greater negative effects resulting in low team morale and poor workforce health. Absenteeism has reached such an alarming level of 7 billion a year in Australia that many companies have started providing wellness programs to all employees to address this problem.

Wellness programs range from offering employees meager discounts in fitness memberships to full 8 week boot camp programs, nutrition advice, meditation guidance and counseling. So which of these initiatives provide a real a solution to these human resource issues?

Well, over the years, many of these solutions have only shown disappointing results. As little as 10% of Australian employees are enrolled as gym members, and more often than not, those who took up the companies’ program are already past members. In total, only a measly 20% of Australians are actually members of gyms.

With regards to programs such as 8 week boot camps, only less than 1% of employees registered. Only 12 people averaged a class out of a possible 3000 targeted employees. The result is only a band aid solution for those people who don’t need it, instead of a major surgery for those people who do.

With these statistics, it doesn’t take a lot of imagination to see that wellness programs in the corporate sector often don’t work. In many case, the blame falls on lack of knowledge, funds and other resources resulting in a highly inefficient solution with poor take up rates and longevity, a big waste of time and money on a seemingly simple problem.

Future health and wellness programs, should cater to the 90% of overweight and unhealthy employees. The program should allow people of all ages an entry to the right weight and fitness levels to participate at their own speed. Competition and education always play a great role in encouraging individuals to enter the program with a non-threatening environment. Employees can then improve their health and fitness through nutrition based programs and simple starters in fitness as basic walking.

But of course, every program needs to be sustainable, cost effective, measurable and within reach to become a success. It should work both ways, an employee will not continue with the program if they cannot see the benefits from it and an employer will not continue with the program either if they get insufficient return on investment.

With this in mind, human resource issues on the wellness of employees and the succeeding programs to address this issue should be carefully thought out.

Corporate wellness programs should identify the needs of the employees through series of questionnaires for a certain period and ongoing mentoring and support for participants. The bottom line, a combination of employer and employee contributions to this program should bring about a successful and long term program for the welfare of the company and its workforce.

To talk to a human resources consultant to help identify which human resources issues your business needs to focus on go to http://www.end2endbusinesssolutions.com.au/