Published on March 11, 2014
Temporary Staff Resourcing
Overview freespirit resource staff to recruitment agencies & clients across Australia for permanent & temporary assignments. Our candidates are sourced via accommodation networks, advertising, expos abroad, referrals, website job boards and word of mouth. We also offer visa & migration services, salary packaging & payroll support. At freespirit we have helped over 40,000 talented people with different backgrounds & skill sets, achieve the best they can and so help the thousands of clients we have looked after. Our success depends on attracting quality clients & staff. As is often said “Your greatest asset is your staff” But they are also your most time consuming, risky & expensive overhead, that use up unrelenting amounts of management time.
Overview Management & administration of temporary staff requires additional costs in employing those with the specific knowledge in recruitment, industrial relations, immigration, taxation, risks & costing. Valuable time is consumed by trying to find and maintain temporary staff on a recurring basis. Did you know? Human resource management, staff overheads & other costs can be up to an additional 50% on top of the staff wages & superannuation. In good times or slow periods administrative overheads increase or decrease, as demands for your business change. freespirit will grow with your business and remove the burden of IR responsibilities by allowing you time to concentrate on the development & growth of your business, while we are left to deal with these administrative overheads.
freespirit • Sources Staff & Contractors for you. • Accepts requests for new Candidates • Accepts transfers of your existing Staff & Contractors. • Hires them back to you. • Pays the Staff & their packaged benefits to improve Staff retention.
Advantages • Additional untapped stream of pre-screened candidates. • Attractive salary packaging benefits, hassle free for you, improving contractor & staff retention • Australian company with over 18 years experience • Candidates already seen - Peace of mind & time saving • Dedicated Client Service team to help staff with any questions • Free initial staff sponsorship & migration services advice • Job advertising free of charge
Advantages • No PAYG, Payroll Tax, Workers Compensation or FBT returns or audits to worry about • No staff termination costs • Payment of PAYG Tax, super & benefits taken care of • Prompt electronic payments • Source staff quickly, just by visiting our website • Tax effective salary packaging advice • Tax return service for staff
Structure & Public Liability PAYG i.e. Service Provider Services Benefit Provider Hire Pay PayPay Pay Pay Pay
How it Works Once you appoint freespirit… • You provide Job Specifications online via our website or by email. This includes Position Title, term & base rate that we add our margin and on-costs to. • You also have the option to transfer your existing staff, who are then employed by Us. The transfer is a electronic, simplistic, one signature approach. • We search our database, interview & screen for suitable candidates. • We arrange interviews with you. • For those accepted by you, we establish & maintain their payroll & salary packaging. We train them in our staff MBPCloud systems, which may have your brand & be a link on your website if you wish.
How it Works • The staff are then contracted by us to hire to you. • Staff complete our electronic timesheets, which are sent to you in one link at the end of the period for approval. • You are invoiced at the end of each period for all the staff, in one simple payment transaction for immediate payment (24 hours). • Funds are collected by direct debit or deposit. • We are responsible for all the staff payments including: Net Pay, PAYG, Superannuation, FBT, Payroll Tax, Workers Compensation & Public liability. • We meet the costs of resourcing & candidate search. • You continue to hire the staff & we source additional staff for you. If you have a candidate that requires a visa, we will arrange that too.
Payroll Tax Introduction The employment agency provisions are in Division 8 of Part 3 of the Act. These provisions apply to an employment agency contract (whether formal or informal) where a person (the employment agent) procures the services of another person (service provider) to work for a client. Under such a contract, there is no agreement between the service provider & the client. The diagram below depicts a common employment agency arrangement. Service Provider Employment Agent Client
Payroll Tax Under the employment agency provisions, the employment agent is taken to be the employer (section 38) and the service provider is taken to be the employee (section 39). Amounts paid or payable under the employment agency contract are taken to be wages (section 40(1)). Consequently, under section 41, the employment agent is liable to pay payroll tax on the amounts taken to be wages. A „chain of on-hire‟ occurs, when an employment agent on-hires a service provider to another employment agent, who in turn on-hires the service provider to it‟s client. This would usually mean that both employment agents are liable for payroll tax on the same arrangement.
Chain of on-hire Example of a „chain of on-hire‟ diagram: The solid arrows indicate the first employment agency contract where Agent 1 procured the Service Provider for their client, Agent 2. The dashed arrows indicate the second employment agency contract, where Agent 2 procured the Service Provider through Agent 1 for their client, Business 1. Under this chain of on-hire, Business 1 pays $100 to Agent 2. In turn, Agent 2 pays $75 to Agent 1, & Agent 1 then pays $50 to the Service Provider. Service Provider Agent 1 Agent 2 Business 1
Ruling Application of the employment agency provisions: Agent 2 would be an employer under section 38 of the Act and the payment of $75 to Agent 1 would be wages under section 40(1) of the Act. Similarly, Agent 1 would also be deemed to be an employer & the payment of $50 to the Service Provider would be deemed as wages. Ruling To overcome this, a Ruling has been issued that the employment agent closest to the ultimate client will be regarded as the agent liable for payroll tax. Example: only Agent 2 (who is the employment agent closest to the ultimate client) is liable for payroll tax on $75 paid to Agent 1. Taxable Wages $50 $75 $100 Service Provider Agent 1 Agent 2 Business 1
Declaration In order for Agent 1 & Agent 2 to know exactly their payroll tax obligations, Agent 1 should require Agent 2 to complete OSR Payroll Tax Form OPT 20 (Employment Agency Contractors – Chain of on-hire declaration). This will overcome both Agent 1 & Agent 2 being liable to pay payroll tax on the same arrangement. In completing this Declaration, Agent 2 will confirm either it is: • not liable for payroll tax, or • will pay payroll tax on the „wages‟ paid to Agent 1
Example If Agent 2 indicates on OSR Payroll Tax Form OPT 20 that it: a) is not liable for payroll tax (because its total wages is below the taxable threshold), Agent 1 would be liable for payroll tax on the $50 paid to the Service Provider; or b) will pay the payroll tax on the arrangement, Agent 1 is excused from liability on the payment made to the Service Provider. Reference Payroll Tax Act 2007 Revenue Ruling No. PTA027
Insurance Public Liability Public liability insurance covers your potential liabilities to third parties for personal injury or property damage, should you or your business be found to be negligent. Statute laws impose a 'duty of care' upon certain people, including employers, owners of property and suppliers of goods. If you are found to have breached your duty of care, you may be liable for damages. Professional Indemnity Insurance protects professionals who are legally required to provide a higher degree of skill & care, against negligence claims by a client. This insurance is available across a range of industries & covers the costs & expenses of defending a legal claim, as well as any damages payable.
Workers Compensation If you employ or hire workers on a regular, casual or contract basis, you are considered to be an employer and must have a worker‟s compensation insurance policy. The contract may be expressed or implied, verbal or written, and it may be a contract of service or apprenticeship. As per the Workers Compensation Act, the employer has to cover it‟s workers against workplace accidents and Labour hire agencies & group training companies are usually the direct employers of on-hired workers and the clients (host employers are not responsible for this purpose).
Contact [Name] Resourcer freespirit T : 1300 373 377 E : [name]@freespirit.com.au www.freespirit.com.au
Author(s) Human Resources Revised June 2013 Flexible Staff Resourcing/Temporary Staff Assignments Policy Contents 1 Background 1 2 Scope 1
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