Payroll Rules and Regulations in Australia

Payroll Rules and Regulations in Australia: If you are a business owner in Australia, you’ll have to strictly adhere to its rules and regulations.

It’s mandatory for all businesses with employees to follow the payroll rules and regulations in Australia, as non compliance can result in serious penalties such as fines, interest charges and also loss of funding from the government.

In this article, we will cover the major parts of the payroll rules and regulations to save you from all sorts of penalties. So here we go!

Understanding Australia’s Payroll Law

Understanding Australia’s law system is equal to having compliance with it. There are many laws in Australia that keep a check and balance on the payroll system. The three most important laws are as follow:

Payroll Rules and Regulations in Australia
Payroll Rules and Regulations in Australia

The Fair Work Act (2009)

The Fair Work Act (2009) deals with a wide range of laws, all of them are employment related. It includes laws which decide the minimum pay for the employees and allowances and deductions for different Modern Awards.

Under this act, the businesses have to follow the National Employment Standard (NES), which covers all the aspects of employment, such as maximum weekly working hours, public holidays, leaves, overtime etc. This act also looks out for workplace bullies, unjustified dismissal and other such issues.

The Income Tax Assessment Act (1997)

The Income Tax Assessment Act (1997) deals with all the tax related calculations and deductions. It guides employers about how they have to withhold the tax from the employees wages and send it to the ATO. Employers are required to accurately calculate the amount of tax they need to withhold. They should also consider all the necessary deductions such as work related or personal expenses.

It’s very crucial to comply with this act, not only to save yourself from penalties but also it can unbalance the entire finance and reputation of your business. So, it’s for your own benefit.

The Superannuation Guarantee Act (1992) 

The Superannuation Guarantee Act (1992) is also a very vital aspect of the payroll regulations. It negates that the employers must contribute a percentage of the employees wage to the super account. It’s important to calculate and make an accurate contribution to this fund.

It’s also crucial to meet the deadline of this contribution, which can be either monthly or quarterly. Non-compliance with this act or even being late can result in lots of penalties. So, in order to be on the safe side, make sure to comply.

Payroll Rules and Regulations in Australia
Payroll Rules and Regulations in Australia

Major Parts of the Payroll Compliance

In order to comply with all the rules and regulations of the Payroll Rules and Regulations in Australia, it has five major parts you need to comply with:

  1. The National Employment Standard (NES)
  2. Modern Awards
  3. Keeping Records
  4. Single Touch Payroll (STP)
  5. Payroll Tax

Let’s dive into them.

The National Employment Standard (NES)

The national employment standard in Australia provides a safe net for all the employees working in Australia. Here are the entitlements that NES provides to the employees:

  • The maximum working hours for full-time employees are 38 hours per week and less for part-time or casual employees. Employees have the right to say no to overtime if it’s not reasonable. 
  • Full-time and part-time employees are allowed to request for Flexible working arrangements if they are working with that employer for almost a year.
  • Based on an employee’s regular hours of work, they are allowed to have an annual paid leave of 4 weeks.
  • Parental leave when an employee’s child is born.
  • Community Service leave.
  • Personal, family related leaves.
  • Public Holidays.
  • Termination notice and final pay.
  • Employees should be given a copy of the Fair Work Information Statement.

All the national workplace relations system employees are covered by NES. It is mandatory for all the businesses in Australia to make NES their minimum standard

Modern Awards

Modern awards are specific documents that specify and set entitlements for employees other than the National employment standard in Australia. They cover the following minimum entitlements:

  • Regular working hours
  • Base pay rate
  • Necessary breaks
  • Rostering
  • Penalties
  • Overtime Pay rates
  • Allowances

It’s a huge struggle for many businesses to understand and navigate which category of modern awards they fall into. For that purpose, Fair Work Australia has made a tool award finder, which makes it all very easy.

Keeping Records

Majority of businesses either don’t know or they don’t bother to care that they are supposed to keep all their documents and awards for a minimum of seven years.

You need these records in case of any of your business audits and calculations. These records include employment contract, payslips, timesheets and rosters.

The following information must be displayed by these documents:

  • All the details of the employee, including name, date of commencing, address, contact details etc.
  • Any written leave.
  • Hours of work.
  • Superannuation contributions.

These records and documents must be kept hidden and should only be in the eye of the people related to it such as the payroll staff, accountants and the employees themselves.

Single Touch Payroll (STP)

Record keeping and staying compliant with all the Payroll Rules and Regulations in Australia or anywhere is not an easy task to do manually. It can result in many mistakes and errors.

It can result in misplacing the records, not being able to identify mistakes or inaccurate records.

We have witnessed many companies who do their payroll manually and then face several errors while auditing it. 

But if you are a business owner in Australia, you must’ve heard about the Single touch payroll. It is a software that enables employers to directly reach government agencies like the ATO.

Once you enter all the details of an employee, this single touch payroll software sends all the notifications to the ATO automatically. This software can save your time and free you from the payroll duties.

Through this software, the ATO makes sure that all the employees are being paid correctly and no errors are being made. It can also save you from the penalties you must pay if you make mistakes while calculating payroll manually.

As of 1 July 2021, the Australian government made it mandatory for all businesses to use this software. 

So now you’re also compliant to use single touch payroll.

If You Want To Calculate Your Payroll Tax Click Here

Payroll Tax

You need to register for the payroll tax in Australia once your wage passes a specific income threshold according to the Australian payroll tax laws. When your total wage exceeds this limit set up by the law, you will have to pay a percentage of it as a payroll tax.

This payroll tax rate in Australia is currently set at 5.45%.

You are strictly instructed to follow and comply with the payroll tax compliances.

Payroll tax rules and regulations depend on the total amount of the salary and wage paid by the employer. Therefore, the compliance typically applies to the employees other than small businesses.


To wrap it all up, compliance with payroll rules and regulations is mandatory for all businesses in Australia. Businesses should stay up to date with all the recent updates in the laws and stay compliant with them in order to maintain a smooth payroll system.

The process might seem complex and difficult, but with the help of this guide you’ll be able to crack it in a snap!