Is cash hand illegal?

Cash in hand refers to paying your employee directly with cash, as opposed to via both parties banking institutions. Although it may be considered a dodgy practice, paying your employees cash in hand is not actually illegal. This blog post will answer all you need to know about paying cash in hand to employees, Christmas casuals and mere puff.?

Is cash in hand illegal?

In Australia, paying an employee “off the books” is often thought of as an illegal activity, associated with tax evasion. However, paying your employees cash in hand is not actually illegal so long as employers follow the correct procedure in regards to all payments, in accordance with?Australian Taxation Office?(ATO) directives.

How do I pay my employees cash in hand legally?

To comply with relevant law, as an employer, you must comply with the following ATO directives including:

• Ensuring that you are paying your employees the correct amount, governed by the correct award;
• Removing the correct amount of tax out of your employees pay to ensure they do not owe money to the ATO at the end of the financial year;
• Correctly paying your employee superannuation;
• Keeping relevant records of your employees pay to ensure you are meeting your employer obligations; and
• Ensuring that you are covered by worker’s compensation in the case of an accident\

To further assist in complying with ATO directives, the following actions can be taken to assist you in solidifying the legitimacy of making your cash payments:

• Provide your employees with a payment summary at the conclusion of the financial year that details their tax deducted and earnings of the year; and
• Provide a pay slip to your employees.

What are the penalties for employers paying cash in hand?

If you, as an employer, are not meeting the aforementioned obligations you will be in breach of both your obligations as an employer and the law, and thus are liable for penalties. Paying your employees the wrong amount, or not paying tax on their behalf may be committing tax fraud. Administrative and criminal penalties for tax fraud is 90% of the tax shortfall, or 10 years imprisonment.

What should payslips include?

A payslip is a note given to an employee when they have been paid, detailing the following:

• Employer and employee’s name;
• Australian Business Number (ABN);
• Pay period;
• Gross and net pay;
• Number of hours worked;
• Hourly or salary rates;
• Other paid entitlements if eligible;
• Authorised deductions such as superannuation;
• Superannuation contributions;
• Employee’s employment status (ie. casual, full-time or part-time); and
• Employee’s employment award.

What do I do if my employer doesn’t give me payslips?

Payslips in Australia must be given to an employee within one working day of pay, regardless of whether the employee is on leave. Employees must be given their slips on paper or via electronic form. As an employee, if you do not receive your payslip within one working day of pay, or if your pay slip does not detail the right information, Fair Work encourages you to communicate with your employer, and give them the information from the Fair Work website?listed here. If they refuse to issue or modify your pay slip to the correct details, you can request a meeting with your employer, and if no action is taken within 7 days, you can report them to the Fair Work Ombudsman. The Fair Work Ombudsman will have Fair Work inspectors investigate the matter, and these inspectors have the ability to issue employers with an infringement notice (which carries a fine) or can take the matter to court on behalf of the employee, where they may be liable for criminal charges.?

When do Christmas casuals start working?

A Christmas casual is a person employed for the Christmas period to manage increased business for customers who are enjoying end of year and Christmas specials. A casual employee of this nature will have work hours that do not follow a regular pattern, and can swap and change shifts easily. Christmas casuals start from as early as the end of October, and are employed until the new year, or unless your business decides otherwise. A Christmas casual may have the opportunity to be hired past the Christmas period, however, all of these terms should be outlined in the employment agreement the employee signs, so as to not be confused or have different expectations. A casual employee, including Christmas casuals are entitled to a higher base hourly rate of pay than full time or part time employees. The law treats Christmas casuals as a normal casual worker, however, Christmas casuals are likely contracted on for a certain period of time ie. three months for what is required of them.?

Legal advice

If you require further assistance with any matters related to payment of employees, you should seek legal advice. Legal Kitz can direct you with your next step, whether you wish to seek payslips from your employer, or if you need assistance paying your employees in cash. Our Legal Kitz business specialists can assist with ensuring that your concerns are addressed, and can provide you with advice that is tailored to your situation. You can book a?free 30-minute consultation?via our website now.?