CarePayCo will facilitate paperwork and processes for you. Should you wish, we can even make payments for you.
You will be your workers’ employer and liaise directly with them when it comes to their employment contracts, duties and schedules.
We strongly recommend that every employee have a contract in place. This sets out expectations and what will happen if the relationship needs to be terminated. CarePayCo can provide contract templates for you to update if you select our “Complete” Setup.
If you select our YOUPAY Package, then CarePayCo is responsible for making all of these payments on your behalf. These amounts will be direct debited from your nominated account in one simple transaction each pay period.
If you prefer to make these payments yourself, we can send you all of the information you need, including the exact calculations and amounts payable.
You will remain the employer of your Domestic Worker.
If your Domestic Worker regularly works more than 30 hours per week, there is a requirement to pay Super at the current rate.
Many Domestic Workers, although they work less than 30 hours per week, will request Super as part of their contract negotiations and families can offer this. We recommend that in this case, the family offers an hourly rate that includes superannuation and allows the Worker to choose whether they want super (lower hourly rate) or not (higher hourly rate).
We do this to take the burden out of ATO and Super Compliance, so that you will not need to make quarterly lodgements directly to the ATO in your name. We take on the responsibility of lodging and paying your Tax and Super.
For now, there is nothing wrong with paying cash to your Employee, so long as you have correctly fulfilled ATO, Superannuation, Fair Work and Workers Compensation Insurance requirements, such as withholding tax and providing payslips.
If you are paying “cash in hand” to avoid these responsibilities, then that is illegal, removes protections from you and your Employee and it may harm your Worker’s ability to get credit or extend their right to work in Australia.
It is extremely common for families to pay their workers an hourly rate without bothering with superannuation, PAYG tax, and other tax matters. Often this happens because the worker advises the family that they have an ABN and are working as an independent contractor. This is usually not an approach you should permit.
The ATO sets out several rules which can be used to determine whether a worker is an Employee or a Contractor. A Domestic Worker will typically be considered an employee if they are:
(i) paid for time worked;
(ii) responsible for providing the materials or equipment required to do their job;
(iii) Must perform the duties of their position;
(iv) Agree to provide their personal services; and
(v) Work hours set by agreement.
It’s clear that based on the above rules, the ATO will generally consider your Domestic Worker an employee, After all, you don’t want your Worker to be setting their own work hours!
If you are paying “cash in hand” to avoid these responsibilities, then that is illegal, removes protections from you and your Employee and it may harm your Worker’s ability to get credit or extend their right to work in Australia.
The Standard working week in Australia is 38 hours or 7.6 hours per day. If Domestic Workers work part-time they are entitled to a pro-rated portion of the below:
Annual leave that has not been taken is payable to your Domestic Worker when they leave your employment as a part of termination pay. Sick leave is not payable on termination. The entitlements for Casual Nannies are different. You can read more here.
The applicable industrial award is the Miscellaneous Award 2010. Some of its key features:
The award is 64 pages long and quite complex. You can view the Award here.
The pay for an experienced Nanny is likely to be in the range of $30-$45p/h, which is significantly higher than the award rate. If you pay your Nanny in this range and they sign an Individual Flexibility Agreement (IFA) along with their contract, you do not need to pay the penalty rates detailed in the Award. Of course, you can still choose to pay penalty rates and you do not have to put an IFA in place.
If you are paying the minimum award rate to your Domestic Worker, you will need to pay Penalty Rates if hours are worked on Weekends, Public Holidays, at night, or in excess of 38 hours worked per week.
The NES are the 11 minimum standards of employment which cover items such as maximum regular weekly hours of work (38), Requests for flexible working arrangements, Leave, Public Holidays and Termination. The national minimum wage and the NES make up the minimum entitlements for employees in Australia. Casual employees only get some of the NES entitlements. Read more here.
Fair Work Australia is an independent commission with the authority to regulate and enforce provisions relating to minimum wages and employment conditions, enterprise bargaining, industrial action, dispute resolution, and termination of employment.
This is a compulsory insurance. It covers you and provides support to your Employee if they are injured. The premium is based on an estimated amount of salary + super payable. You will need to make an annual declaration of actual payments. If this is higher or lower than your initial estimate you will receive a refund or need to make a payment in respect of the year completed. Each State or Territory has different Insurance requirements.
This is something we manage for you if you select our ‘Complete’ Package.
Single Touch Payroll (STP), is an additional ATO requirement for reporting tax and superannuation information to the ATO with each Pay. It requires that all employers use STP-enabled payroll software.
If using CarePayCo to manage your employee’s payroll, we will take care of STP compliance requirements.
When managing your employees’ payroll yourself, you need to register with the ATO as an employer and withhold the correct amount of tax from your Nanny’s pay. Each quarter, you will also need to submit an Activity Statement to the ATO and pay Super if required.
Fair Work Australia requires that:
You also need to:
Alternatively, if you sign up with Carepayco we manage your employee’s payroll from start to finish. We manage your employee’s superannuation payments, and their quarterly PAYG instalments with the ATO, we provide them with their payslips and much more.
If this sounds overwhelming, then it might be a good time to reach out to the team at CarePayCo. Just contact CarePayCo at enquiries@carepayco.com.au or visit our website www.carepayco.com.au and we will take care of everything for you.
Breathe easy! Just contact CarePayCo.
