HEALTH & LIFE’S BEST PRACTICE NEWS ALERT

Current circulation: 6992 DATE: 3 October 2006 ISSUE NO: 121 Welcome to Health & Life’s free email newsletter service. Tell a friend that we would be happy to add their email address to the distribution list. This service is to provide Health and Life’s clients and those who attended our presentations with up to date information on key financial and practice management issues that may affect your practice. Please do not use this as a substitute to seeking professional advice. Writer in charge: Mr David Dahm CPA, BA Acc, FTIA, FFin, FAAPM,GLF.

Health and Life News Update

Australian Association of Practice Managers (“AAPM”) – Vice President SA

Health and Life are pleased to announce David Dahm is the new Vice President of the Australian Association of Practice Managers in South Australia. David is also on the national Learning and Growth Committee for AAPM. The Learning and Growth committee is committed in developing and promoting educational activities for healthcare practices relevant to practice managers and practice staff throughout Australia. To find out more about AAPM got to www.aapm.org.au. Please note David does not represent AAPM in relation to any past or future opinions or views published in the general media or presented in any seminar or event produced by Health and Life.

The NEW Employment Laws! Part I

In this edition we cover:

Problem: The New Industrial Relation Laws may affect up to 70% of practices in Australia Part I 1. Key areas it will impact on your practice – commentary

1.1. Are you affected? - Corporate trustees of trusts affected 1.2 Wage increases are now frozen 1.3 New Record Keeping Requirements after 24

th September 2007 penalties apply!

1.4 Ordinary hours – timesheets from practice managers? Part II

1.5 Cashing out of annual leave – it is allowed? 1.6 Staff replaced with employees prepared to work under AWA’s or collective agreements 1.7 Unfair Dismissal Laws 1.8 Super Choice legislation now applies to all State Award Employees 1.9 Payroll Tax Audits are on!

2. What should I do next?

The NEW Employment Laws! Part I

Problem: The New Industrial Relation Laws may affect up to 70% of practices in Australia

The new Workchoices legislation was introduced on the 27th March 2006. This is part one of a

two part series which analyses extracts from the Workchoices legislation and assesses the practical opportunities and problems the legislation will have on your practice. It affects all practices that employ staff in a company or that are considered a “constitutional corporation” such as a corporate trustee of a trust and/or most Victorian employers. Wages in your practice represents over 55% of your total costs. This new legislation will have a major impact. We do not condone employers cutting benefits to staff in order to take advantage of the new laws. Where appropriate the new legislation should be used as an

opportunity to improve practice productivity and to reward your staff. Some of the employer benefits under the new laws:

• No overtime, penalty or redundancy payments

• Cashing out of leave entitlements • Access to more lenient unfair dismissal laws

• Employees can enter into flexible work arrangements

• State Award pay increases are “frozen”- no pay increases for State Wage decisions Some employer downsides:

• Additional record keeping – greater transparency

• Super Choice legislation applies to all Award Employees We do not intend to provide a “blow by blow” detail of the new laws. The legislation is still a moving target and we seek to address some of the key issues that practices need to start to consider today. This is a commentary on the legislation and its impact. Please seek additional professional advice and attend industry seminars in order to keep up to date. For further information, contact WorkChoices Infoline 1300 363 264 or https://www.workchoices.gov.au or us at Health and Life 1800 077 222.

The NEW Employee Laws! Part I

1.1 Are you affected?

Most corporate trustees of service trusts are affected. In other words, if your employees are employed by a trading trust where the trustee is a company for example Dr Good Pty Ltd as Trustee for Dr Good Service Trust, then this would be affected by the new law.

Employees and employers covered by the new federal system

Transitional Rules

Sole traders, partnerships (except for Victoria) are not affected. These employers have 5 years to decide whether they want to incorporate and join the new federal system. If not after 5 years they will move into the state system.

Constitutional corporations and other employers who are not currently part of the federal system, but who are covered by WorkChoices, will move into the new federal system.

The main category: constitutional corporations

To be considered a trading or financial corporation an employer must meet two tests:

• an employer must be incorporated; and • the employer’s trading or financial activities must be ‘significant’ or ‘substantial ’.

Normally corporate trustees of a service trust would be treated as a constitutional corporation if the above conditions apply. 1.2 Wage increases are now frozen

Employees employed under the State Awards will have any wage increases frozen. This means they will have to wait for a Federal Decision before they can receive an increase. More importantly with the replacement of State Awards to the Federal system a number of benefits may be lost as detailed below, unless they are preserved by instruments such as Australian Workplace Agreement or Collective Agreements.

The Australian Fair Pay Commission

Under WorkChoices, the Australian Fair Pay Commission (Fair Pay Commission) is responsible for setting and adjusting minimum wages and casual loadings for employees in the federal workplace relations system.

For employers and employees from the state systems who are entering the new federal system for the first time, their state award and applicable state or territory laws will become a ‘notional agreement preserving a State award’ (NAPSA) in the federal system on commencement of WorkChoices (.i.e. 27

th March 2006). These Award benefits will be preserved for up to 3 years.

Guaranteed basic rates of pay

Federal Award classifications will be established that has a matching basic rate of pay. This may be a basic periodic rate of pay (i.e. basic hourly rate of pay). The minimum adult rate that must be paid is set at $12.75 per hour.

A basic rate of pay does not include incentive-based payments and bonuses, loadings, monetary allowances, penalty rates or any other similar entitlements. Awards and agreements may provide for the payment of penalty rates or overtime loadings. These will not be part of the four minimum terms and conditions enshrined in the Australian Fair Pay and Conditions and Standard. The four minimum standards are, Ordinary hours of work, Annual Leave, Personal Carer’s Leave (including sick leave) and Parental Leave.

1.3 New Record Keeping Requirements after 26th September 2006 penalties apply!

Many practices normally keep wages records for Award staff only. Practice Managers paid $55,000 or less will also have to maintain a detailed wages record. The average salary of a practice manager in Australia would be paid just below this threshold. Who knows your practice manager may apply for a salary increase to avoid the additional paperwork! More importantly they may need to keep a timesheet for the very first time.

Many practice managers claim they are working well over 38 hours per week. The real issue is it becomes more transparent whether your practice manager is working unreasonable overtime and you may be in breach of the legislation. This is detailed under section 1.4 Ordinary Hours of Work – timesheets from practice managers? (see below)

Record-keeping requirements

The Workplace Relations Regulations 2006 provide a single set of record-keeping and payslip requirements. Broadly, records must indicate:

• the instrument which covers the employee (eg workplace agreement, award); • remuneration earned, including the hourly rate of pay, allowances, and pay period; • the total number of hours required to be worked by an employee, whose base annual

salary (ie excluding employer superannuation contributions, bonuses, loadings, etc) is less than $55,000 (indexed);

• if the employee is entitled to overtime loadings under an industrial instrument or a contract of employment - the employee’s start and finishing times;

• the accrual of annual, personal or other forms of leave and the balance of each type of leave;

• the amount of superannuation contributions paid and the fund to which they were made; • certain information that must be included in a pay slip.

The Regulations require written records in English which must be retained for seven years, and be made available for inspection by workplace inspectors if required

Breaches of record-keeping requirements

Individual fines from $55 up to $275. Companies can be fined from $275 up to $2,750 for not maintaining proper records and payslips.

1.4 Ordinary hours – timesheets from practice managers?

Many practice managers comment they work greater than a 38 hour week. For the first time Award Free employees such as providers and practice managers are required to work a standard 38 hours per week plus reasonable overtime. The new record keeping requirements creates a new audit trail potentially exposing employers to prosecution if excessive overtime is not monitored. Your practice manager will have to start keeping timesheets! Owners may need to re-evaluate the role and responsibilities of their practice manager and ensure they are not responsible for “front desk” work. Owners will need to ensure there is a more efficient use of a practice manager’s time.

The Australian Fair Pay and Conditions Standard (the Standard) provides that a person cannot be required or requested to work more than 38 ordinary hours per week, plus reasonable additional hours.

The Workplace Relations Act allows for an employer and employee to agree in writing that the employee’s hours of work are to be averaged over a period of no more than 12 months (e.g. 152 hours over 4 weeks). That agreement must be through an award, workplace agreement or by other means (e.g. contract of employment).

Reasonable additional hours

The Standard provides that an employer may request or require an employee to work 38 ordinary hours per week and reasonable additional hours. In determining whether the additional hours an employee is requested or required to work are ‘reasonable’, a range of factors must be taken into account, including (but not limited to):

• any risk to the employee’s health and safety; • the employee’s personal circumstances including family responsibilities; • the operational requirements of the workplace or enterprise; • whether any of the additional hours are on a public holiday; • the employee’s hours of work in the four weeks prior to the request; and • the notice (if any) given by the employer of the additional hours and by the employee of

his or her intention to refuse it.

JJTo be continued (in the next few days)J..!!

2. So where do you go to from here?

1. Attend industry seminars such as the AAPM/AMA road shows; 2. Start planning appropriate AWA agreement structures for your practice; 3. Contact Health and Life - we have developed AWA template agreements for doctors, practice managers, nurses, receptionists with job descriptions; 4. Consider upgrading or outsourcing your payroll system. We are Quick Books Accredited Providers and provide MYOB support; 5. If you have a payroll tax problem contact us about our template service agreements which can help you reduce or eliminate your payroll tax problem; 6. Consult your accountant and adviser to discuss these issues. For more information about any issues raised in this article. Call us on 1800 077 222 we are happy to

receive any feedback and will provide a free initial telephone consult.

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Health & Life Pty Ltd’s Best Practice News Alert is designed as a comprehensive and up-to-date Accounting and Practice Management news service to alert readers to the latest in practice and related developments affecting the medical, dental and allied profession as they happen. It is published when there is news to report. No responsibility can be accepted for those who act on its content without first consulting us or obtaining specific advice.

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