On 1 March 2014 small businesses around Australia will breathe a sigh of relief when the responsibility, burden and stress of paying government entitlements for paid parental leave to staff will revert to Centrelink.
The paid parental leave scheme was introduced in January 2011 and provides for 18 weeks’ pay at the national minimum wage. The process seemed easy enough on paper for businesses to execute for its employees. However, delve further into the legislation and a raft of variables need to be taken into account, such as leave entitlements, the superannuation guarantee and when payments are received and made, just to name a few.
This year, the MYOB Business Monitor, found the paperwork burden topped SMEs’ lists when asked about policies that influence them to vote for a particular political party. Small business has continually voiced concerns regarding this burden; until now their concerns have largely gone unheard.
As an MYOB partner working with small businesses in regional NSW, I have seen first-hand the impact the legislation in its current state has had on operators who battle every day to make a living. In particular, I’ve worked with a small beauty salon that has had three staff take maternity leave since the scheme has been in place.
Going through this process wasn’t a pleasant one and the frustrations started from the outset when the owner attempted to download and install the Federal government’s Auskey program (the gateway to communicating with government agencies). In this example, just downloading the Auskey program took more than four hours, which included multiple futile attempts and phone calls to the technical help team, only to find the small business’s IT system was too old to cope with the installation.
Once a solution was found, the need to make significant changes to the accounting payroll system to cope with the intricacies of the payments had to be implemented. No leave accruals, no superannuation guarantee contribution, no payroll tax implication. Although the Department of Human Services provided an employers’ toolkit, it was a lengthy and often confusing document, leaving the business owner without the confidence needed to ensure she was making the payments correctly.
To add further confusion for the owner, one employee’s entitlement covered a period where there was an increase in the national minimum wage. This change meant further amendments to the setup of the payroll software as payments needed to be made to employees based on the receipt of funds from the government. Often these were paid in bulk, and ensuring the payments were correct and working out PAYG tax on each payment cycle became a burden.
Employees were also confused about how to apply for the paid parental leave payments. Some thought this was through their employer, which resulted in delays in their application being processed by the Family Assistance Office. The education process to both employers and employees was almost non-existent.
The time taken in reading, digesting and understanding all the material and implications of the scheme is exhausting. Each time a staff member becomes entitled to the payment the processes had to be revisited. Going through the process time and time again takes the attention away from the owner to grow and manage other parts of the business.
Due to the complexity of updating the paid parental leave system, many bookkeepers in Australia have been left confused on how to correctly align the payments within payroll and accounting products. I have assisted numerous bookkeepers around Australia and everyone I spoke with had similar experiences and stories to tell about how frustrated their small business clients were with the understanding and administering of these payments.
When business owners are struggling every day to maintain their business, employ and pay staff, keep necessary paperwork, account for GST and other government requirements and try to make a profit, the tiresome burden of addressing more red tape as a government payment agency through this current scheme left them stressed and upset.
Administering the payments on behalf of the government has been a time consuming and at times a very frustrating process. I have no doubt that small business owners will be very happy to see the changes implemented on 1 March 2014, one less piece of red tape to cope with.
Leanne Berry is a consultant at LoveYourNumbers and a MYOB partner
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