Legal

SUPERANNUATION AND ANNUAL LEAVE LOADING WHAT’S THE POSITION?

Employer clients of mine have often asked me the question. Do we have to pay superannuation on annual leave loading? The answer is not always straightforward and there has been confusion as to whether or not it does or does not have to be paid. However, an announcement from the ATO clarifies things.

By Walter MacCallum, a Principal at Russell Kennedy Aitken Lawyers. Russell Kennedy Aitken Lawyers is the newly merged firm of Aitken Lawyers in Sydney and Russell Kennedy Lawyers in Melbourne.

Under nearly every modern award, annual leave loading is an entitlement usually applied by way of an additional payment of 17.5 per cent on top of an employee’s base rate of pay, the period that employee is on annual leave. Historically, annual leave loading was incorporated into awards to compensate employees in circumstances where those particular employees would have ordinarily received overtime or penalty rates of pay during the period that the employee took his or her annual leave.

However, as the modern awards were developed, the entitlement to annual leave loading has broadened and now most modern awards apply the leave loading payment to classifications of employees across the board and in particular, many employees who would not normally perform work that would work overtime, or on Saturdays and Sundays when penalties rates apply.

Recently the ATO has clarified the position, stating that in their view, annual leave loading will be ordinary time earnings unless it is referable to a lost opportunity to work overtime. The effect of this is that superannuation is payable on leave loading unless the employer can demonstrate that the leave loading is referable to a lost opportunity to work overtime or work at penalty rates.

The ATO has acknowledged that historically there has been a confusion and employers will not be the subject of scrutiny as to whether or not superannuation has been paid or not paid on annual leave loading payments where the employer has self-assessed that annual leave loading payments were not ordinary time earnings because it was in relation to employee’s loss of opportunity to work overtime and/or penalty rates and there was no evidence to suggest the entitlements were something other than overtime.

However, for future quarters employers must be able to prove that the leave loading payment is referable to a lost opportunity to work overtime or at penalty rates in order to avoid having to pay the superannuation guarantee charge on the leave loading payment.

The risk for employers in not being able to prove this, if and when the ATO comes knocking, is that the employer may be liable for not only unpaid guarantee charges but interest, fees and penalties or worse still, be the subject of a director’s penalty notice creating a personal liability on directors of employer companies.

SO WHAT CAN EMPLOYERS DO?

Until the modern awards are clarified with express wording dealing with the reason for the annual leave loading namely, clearly stating that it is in compensation for the lost opportunity to work overtime or at penalty rates, the only viable alternative is to have a written policy or a written term of an employment contract. That policy or term of the contract would need to recognise the mutual agreement between employer and employee that the basis or reason for the entitlement the annual leave loading is by way of compensation for the loss of opportunity to work overtime or at penalty rates.

So employers firstly need to check the modern award relevant to their employees as to whether or not there is any express provision dealing with annual leave loading and if not, consider documenting the position in a policy and/or future employment agreements. Otherwise, employers will be required to pay an additional 9.5 per cent (currently the amount of the superannuation guarantee charge) on top of the 17.5 per cent annual leave loading payment. drinks trade|19

WINE AND TOURISM INEXTRICABLY LINKED

Andreas Clark is Chief Executive of Wine Australia.

Australia produces great wine that is enjoyed by millions of people around the world. We export more than 60 per cent of the wine we produce and – with the support of the Australian Government’s $50 million Export and Regional Wine Support Package – we’re accelerating this international demand for Australian wine in key markets. A valuable (if not ‘untapped’) opportunity for our wine sector in this space is the inextricable link between wine and tourism. We know that food and wine are big drivers for tourist activity and, with the right approach, tourism can be a great contributor to a winery’s bottom line. In 2018, Wine Australia partnered with Tourism Australia on a $36 million Crocodile Dundee-themed marketing campaign aimed at supercharging the value of American tourism in Australia. The campaign was officially kick-started with a new broadcast ad, unveiled to a TV audience of more than 100 million Americans at the ‘Super Bowl’. Since then we’ve empowered communities with grants for wine tourism marketing campaigns, events, infrastructure and innovative products or services. These projects are currently being delivered across the country and will be completed by June 2020. We’re also delivering a comprehensive regional program of ‘Growing Wine Exports’ and ‘Growing Wine Tourism’ workshops for new and experienced wine businesses. And in a first for Australia, Wine Australia has partnered with the Australian Tourism Export Council (ATEC) and the South Australian Tourism Commission (SATC) to present a three-day National Wine Tourism Conference ‘Beyond the Barrel’ (18–20 June), packed full of educational workshops, commercial business meetings, engaging conference sessions and networking events – all designed to propel wine businesses into the world of tourism. Visit erwsp.wineaustralia.com or contact growingwine@wineaustralia.com.

INTRODUCING THE SUPPORTER SEAL

Alexis Roitman is the Chief Executive Officer of the Independent Brewers Association.

Since we launched the Seal of Independence in May last year, the majority of IBA members have begun applying the Seal to their beers. As it appears on more and more cans, bottles and tap badges around Australia the ‘Certified Independent’ mark is fast becoming a recognisable mark of authenticity. The IBA launched the Seal as a response to the rising consumer demand for independent, locally-produced products and for transparency in ownership. The Seal is a powerful tool that helps beer drinkers navigate the category and indicates to consumers that the beer in their hand is produced by one of the growing number of Australian independent brewers. Beer drinkers are not only placing increasing value on their beer choices, but they are also seeking to support the pubs, bars, clubs and bottle shops who are strong supporters of independent beer. Based on the IBA members’ response to the Seal – and on numerous requests from our valued colleagues in trade – we are now looking to expand its reach by introducing the Supporter Seal. The Supporter Seal will be available for trade members that support independent brewers, allowing drinkers to recognise which pubs, bars, clubs and bottle shops support independent beer. Watch this space. Our members look forward to working with the trade on the roll out of the Supporter Seal, and to assist consumers in making informed choices about both the products that they consume and the venues that they patronise.

INTERVIEWS ALONE ARE NOT SMART

Simone Allan is founder and director of Mondo recruitment agency.

Did you know that 23 per cent of new hires leave within their first year and the cost of a bad hire is between one and three times the salary of the person you hire? It is important to get it right. Some innovative hiring techniques include being lateral in questioning the motives of your applicants. Online retailer Zappos tempts its new recruits with $4000 if they quit on the spot. If they are prepared to take the money and run, they were never serious about working there. This saved Zappos a lot of money down the track. Take time to identify your good hires and work to keep them. Use varied assessments. Get them to meet the larger team, ensure you have spoken to previous managers. Don’t just read written references - have you ever read a negative written reference check? Think of creative challenges - arrange to meet them in different locations - one in a formal interview environment, maybe one at a coffee shop and one in a licenced location - see how they are in different situations. Technology can now be used to assist the interview process such as gaming. Hiring strategist Paul Jacobs says giving people a taste of what a job is like through a role playing game may assist the hiring process. A successful game can attract suitable candidates. Take special note of their style and gravitas for example their handshake/eye contact/ dress/phone manner. Were they on time? Do they follow up with an email of thanks? Be a warrior when it comes to finding your talent - think of many techniques to secure the best talent and don’t just rely on the interview process, an interview alone is not smart.