Paying employees correctly, issuing them accurate pay slips and avoiding common payslip mistakes lie at the heart of your responsibilities when it comes to hiring and remunerating staff.
As an employer, you’re at risk of serious consequences if pay slip or renumeration errors are made and discovered.
You need to get pay and pay slips right every pay cycle, not only for your sake, but for the sake of your staff who deserve precision and fairness.
Know the law
To fully understand your legal obligations when it comes to paying staff and issuing pay slips, you need to refer directly to official government sources, particularly the Fair Work Ombudsman and stipulations set out under Award Agreements (which are often in flux).
How to structure a pay slip and what to include
Pay slips are issued to ensure that every employee is paid correctly and act as a receipt or proof of payment for further record keeping and activity.
These become important documents for employees. For example, employees often use them when they apply for personal loans or credit cards from banks.
According to the Fairwork Ombudsman, a pay slip needs to include the following, so be sure to avoid mistakes in this area:
- employer’s and employee’s name
- employer’s ABN
- pay period
- date of payment
- gross and net pay
- if the employee is paid an hourly rate:
- the hourly rate
- hours worked at that rate
- the total amount of pay at that rate
- loadings (including casual loading), allowances, bonuses, incentive-based payments, penalty rates or other paid entitlements
- the pay rate that applied on the last day of employment
- any deductions from the employee’s pay, including:
- the amount and details of each deduction
- the name, or name and number of the fund / account the deduction was paid into
- superannuation contributions, including:
- the amount of contributions made during the pay period
- the name, or the name and number, of the superannuation fund
- You may choose to include leave balances and annual leave in your pay slips, although this isn’t required.
Issuing pay slips
As an employer, you need to issue a payslip to every employee within one working day of the employee payment being made.
You can either issue a payslip electronically or on paper, however electronic records are preferred – plus they’re more convenient.
You should ensure your pay slip is print-friendly, legible, and clearly structured.
If you require assistance there’s a payslip template available for your use from the Fair Work Ombudsman.
Costly pay slip mistakes
As an employer, you could potentially face penalties if you commit the following mistakes:
- Not issuing a pay slip.
- Not issuing a pay slip within one day of paying your employee.
- Issuing a pay slip with incorrect information.
Although inadvertent errors have avenues of recourse, you should do everything in your power to never make such easily avoidable payslip mistakes.
Common pay mistakes
Take careful note of the following common pay mistakes, which can (and should) be easily avoided by every employer.
Penalty rates
It’s important to avoid making pay mistakes relating to penalty rates. It’s essential you understand and comply with the rules associated with penalty rate calculation and overtime pay.
Erroneous pay rates
Knowing and correctly applying pay rates, according to awards is extremely important.
Be sure you don’t make any mistakes around the correct payment of wages according to the applicable award rate or your agreement with employees.
If you need assistance clarifying industry awards, refer to the Fair Work Ombudsman’s useful Find My Award Tool.
Not issuing and recording correct pay slips
Ensure you’re issuing correct pay slips, on time, with correct information while also ensuring you’re keeping your own records of these pay slips as well.
Single Touch Payroll (STP)
In previous years, you wouldn’t only issue regular pay slips throughout the year but would also issue an end-of-financial year payment summary for the purposes of your employee’s tax return.
Under STP, you no longer need to do this.
Your employee’s payment summary (or income statement) for the financial year will instead be made available on their MyGov account automatically.
