What you need to know about employing contract workers

Contract workers or seasonal workers are a necessary part of many industries.

In fact, they help business remain profitable by helping out when help is most needed and keep costs down by leaving when it’s not.

A good example of this is the agriculture industry, where picking and treating crops is a seasonal activity, and farmers are likely to take people on a short-term basis.

Other industries that make use of seasonal workers are dairying, horticulture, cotton and the accommodation industry, where peak season is usually summer, and hotels need to be stocked with cleaners, gardeners and cooks.

While great for employers in many ways, running a business on contract work usually means more annoying forms and bureaucracy for employers – and for good reason.

When it comes to superannuation, keeping your business’ records up to date is important not just for the employee who will be receiving a super contribution, but to shield yourself against unnecessary and avoidable fines.

If the Australian Taxation Office (ATO) isn’t aware a worker has left your business, they and the employee’s superfund may think you’ve neglected to pay their guaranteed contributions. In other words, they have no idea who’s working for you if you don’t tell them.

Generally all workers earning over $450 per month are entitled to guarantee super contributions of 9.5% per annum. It doesn’t matter if they’ve only worked for a month or two – their guaranteed contribution will be calculated by the time they have worked.

If you don’t keep up with super payments, you might be fined by the ATO with what is known as the super guarantee charge (SGC). Currently, that means 10 per cent interest on what you owe per quarter, plus a $20 administration fee per employee, per quarter.

It’s the kind of fee that can really add up if you’re employing ten, twenty or a hundred workers – and it’s something that can be easily avoided with a bit of organisation.

So what can employers do to avoid getting themselves into the above situation? Firstly, remember that super contributions are due at least every quarter –so consolidating your employee records at least four times a year is necessary.

The ATO’s new SuperStream payment system will also help employers to keep better track of their payments by streamlining them, no matter which super fund their employee is with.

Keeping consistent records will not only benefit you as the employer, but the workers you employ and your business as a whole.

First Super commissioned The New Daily to research and write this article. The views expressed are of The New Daily.

This publication was issued by First Super Pty Ltd (ABN 42 053 498 472, AFSL 223988), as Trustee of the First Super superannuation fund (ABN 56 286 625 181). It does not consider your personal circumstances and may not be relied on as financial advice. Content was accurate at the date of issue, but may subsequently change.