Salary Packaging Services CUASPS2017

Range of salary package items

Items that are concessionally treated; and/or exempt benefits include:

• employee superannuation (to the Government Employee Superannuation Board (GESB) or a private superannuation fund)
• motor vehicles (for private use) and by way of novated lease
• e-bikes
• childcare (employer provided only)

Items that are otherwise tax deductible benefits include:

• business equipment purchase/lease
• financial counselling (e.g. for salary packaging)
• financial products (e.g. disability insurance and income protection)
• home/office expenses
• investment loan interest
• laptop or notebook computers or personal digital assistants (PDAs)
• living away from home allowance
• mobile phones (for business use)
• professional subscriptions
• self-education expenses
• uniforms
• work related travel expenses
• others (e.g. remote area benefits)

For further details, check the Specifications and Statement of Requirements Guide.

Out of scope activity

Financial services are not provided under this CUA.

Salary Packaging Flow Chart shows the general salary packaging process and Salary Packaging Flow Chart - Novated Leases shows the salary packaging process for novated leases.

Buying direct

Western Australian State agencies need only complete the Order Form and forward it to the contractor(s) of choice. The order form is for employers only.

A State agency or any other approved user may engage one or more contractors to provide salary packaging requirements to their employees.

Where a State agency engages more than one contractor the employee will select only one contractor as the service provider and that contractor will notify the employer. WA Government employees should view the What will it cost? section to obtain prices for the items they require. They should also explore any alternative offerings negotiated by their State agency where more than one contractor is appointed, employees can evaluate which contractor represents best value for money for their needs. 

Other Policy requirements

State agencies should be aware of the following requirements under Western Australian Procurement Rules as they apply to purchases from this CUA. The below table is a summary of the requirements, and State agencies are encouraged to review the WA Procurement Rules.

Procurement planning

 Request development and contract formation

Contract management

Exemption from using this CUA

Department of Finance Procurement Frameworks is responsible for processing and approving all requests from State agencies seeking exemption from using a mandatory Common Use Arrangement (CUA).  Requests for an exemption are considered on a case-by-case basis, and a requesting agency must be able to demonstrate that a business need cannot be adequately met by the relevant CUA.

Exemption requests should be directed to the contract manager or the Director Common Use Arrangements in the first instance.  Requests for exemption may be received by posted letter or email, but must be in writing and provide sufficient explanation and background to enable the request to be considered. The requesting officer should be the Accountable Authority or delegate of the agency.

For guidelines on what to include in an exemption request, please refer to the Common Use Arrangements Procurement Practice Guideline.

Service lead times

The lead-time required for commencement of service, from acceptance of an order to delivery, is dependent on many factors such as the number of employees transitioning, whether there is a change of service provider, and the State agency’s special requirements. The service lead times can be as short as two weeks for a State agency with few employees and may be longer than three months for larger State agencies.

Generally, a longer transitioning period is required if the transitioning State agency has a large number of employees with different payroll regimes, and where a complex implementation plan is required to develop computer interface requirements for data upload and download.

The following is a summary of the services provided, broken into three stages:

Stage 1: Develop a model for salary packaging

The State agency liaises with the contractor to develop a salary-packaging model that should incorporate, but not be limited to, the following:

• identification of the range of items that would be considered appropriate for salary packaging for the State agency's employees
• researching and identifying all of the relevant legislation, taxation and government policy requirements and ensuring that the model meets all of these requirements
• government policy, particularly the Department of Commerce, Labour Relations Circular to Departments & Authorities No. 4 of 2012 and employee relation issues
• implications for employee superannuation
• identification of audit and reporting processes
• identification of all required management and administration systems to support salary packaging based on minimum cost to State agencies.
• changes required to State agency’s systems to support salary packaging
• benefit packaging limitations
• documentation required to support the administration of the salary packaging system
• a cost model for salary packaging with the management of individual packages being paid by employees
• an implementation strategy

Stage 2: Design and document the salary packaging system

This stage requires the contractor to provide a comprehensive document for consideration by the requesting State agency. The contractor is responsible for the design and documentation of the salary packaging system, based on the model developed in stage one and seeks approval from the relevant State agency.

Elements of this stage include, but are not limited to:

• design and documentation of all management and administration
• processes required to support the salary packaging system
• design and documentation of audit and reporting processes
• production of documents for promotion and education including brochures, booklets, manual etc in a style which clearly communicate salary packaging
• documentation of reporting processes to review performance of the packaging system
• reporting facilities (e.g. monthly statements, reconciliations, employer and employee year to date, GST liability, fringe benefit tax liability, payroll tax liability, end of year balancing and financial reports etc)
• advising of system modifications (e.g. payroll) required to support salary packaging
• preparation of packaging simulations to assist employees to identify the most suitable form of packaging for their individual needs
• ensuring compliance with legislative requirements, government policy and contractual obligations.

Stage 3: Implementation of the salary packaging system

The contractor(s) will commence provision of a bureau service for the implementation and administration of salary packaging following approval by the State agency.

Implementation of the system includes, but is not limited to:

• implementation of all management and administrative processes to support the salary packaging system, including service for employees in rural locations
• implementation of audit and reporting processes
• undertaking training and education of relevant client representatives and eligible employees
• implementation of processes to manage the performance of the system and continuous improvement of the system.

These arrangements are flexible and State agencies can engage the contractor(s) at any stage.

For your employees

Once your salary packaging system is in place, make sure your employees use the appropriate forms in their interactions with your providers:

• Deed of Novation Form when they engage a salary packaging provider to assist in the leasing of a motor vehicle
• Acceptance of Offer of Salary Packaging Form to communicate the acceptance of a salary packaging arrangement from employee to employer
• Change Providers Form for employers to complete when an employee is changing providers
• Change Providers Form for employees to complete when changing providers

As part of the tender process, contractors on this arrangement have provided details of, and have been evaluated on, their corporate social and environmental responsibility, and the initiatives they have in place to support this.
 

See the list of approved contractors below.

Employee

• Review the items packaged by your employer and identify the CUA providers engaged by your State agency before comparing their offerings.
• Engage with your employer to ensure you use the appropriate forms to manage your salary packaging requirements.

Employer

• Compare the contracted rates and select best value-for-money service providers that match your employees’ salary packaging profile.
• Use multiple providers to offer choice to employees and encourage continuing competition. A separate order form needs to be completed for each CUA contractor.
• Negotiate improved rates or terms where the scope of requirements permits.
• Do not agree to any alternate terms and conditions for this CUA outside of those agreed with Finance. If alternate terms are proposed by CUA contractors, contact the contract manager.
• Provide your employees with appropriate forms to guide their salary packaging.

The matrix table below provides an overview of the contractors that you can purchase from under the CUA and the services they have been contracted to provide. They also include maximum pricing for each packaging service to assist you compare the offerings of each contractor. Don’t forget you are able to negotiate improved rates or terms where the scope of requirements permits.

Delivery

Unless otherwise indicated, prices include delivery of all service requirements to the employer and employee and all applicable levies, duties, taxes and charges. Employees are encouraged to discuss all fees for packaging services with the CUA contractors.  

Unless the customer agrees otherwise in writing, the contractor must pay all out-of-pocket expenses incurred by the contractor in connection with the customer contract including travel expenses, accommodation and subsistence expenses.

Service and Pricing

Salary packaging services are charged against a range of tiers and tables as outlined below:

• Table 1 – Tier 1 and 2, Employee administration fees – fees charged to employee to salary package
• Table 2 - Tier 3: Motor vehicle novated lease and Threshold Benefits
• Table 3 - Special rates for limited salary packaging
• Table 4 - Optional services and benefits - Fuel and Vehicle

All fees are per employee and are GST inclusive for all Contractor prices.

Charges are determined on the items an employee elects to package from each Tier as shown below.

• Tier 1:  If an Employee elects to package Tier 1 benefit(s), only the Tier 1 fee applies.
• Tier 2:  If an Employee elects to package Tier 2 benefit(s), they can also package Tier 1 items at no additional cost. That is, the maximum cost is the Tier 2 fee. No further fees would apply.
• Tier 3:   If an Employee elects to package Tier 3 benefit(s), they can also package Tier 1 and Tier 2 items at no additional cost. That is, the maximum cost is the Tier 3 fee. No further fees would apply.

Table 1 – Tier 1 and 2, employee administration fees – fees charged to employee to salary package

Table 2 - Tier 3: Motor vehicle novated lease and Threshold Benefits

Table 3 - Special rates for limited salary packaging

Fees are per employee, and GST inclusive.

Table 4 - Optional services and benefits

• Test the market on a regular basis to see what the other contractors on the CUA are offering.
• Monitor service level and pricing compliance.
• Document any issues as they arise even if they are resolved. This will assist in ongoing contractor performance management.
• If you are unable to resolve issues contact the contract manager.
• Manage your contract term – monitor your contract expiry date.

Payment by purchasing card

The government purchasing card offers a quick and convenient method of payment allowing goods and services to be efficiently purchased.

Always remember to inform the contractor that you will be paying by government purchasing card at the time of ordering the product or service, and ensure they clearly understand that they must send the tax invoice directly to you, the cardholder.

Forms for employees

Once your salary packaging system is in place, make sure your employees use the appropriate forms in their interactions with your providers:

• Deed of Novation Form when they engage a salary packaging provider to assist in the leasing of a motor vehicle
• Should your employees wish to change providers at any time, they should use the Salary Packaging Change Providers Employee Form.
• Acceptance of Offer of Salary Packaging Form to communicate the acceptance of a salary packaging arrangement from employee to employer.
• Change Providers Form for employers to complete when an employee is changing providers.

Do I have the ability to negotiate a better price?

Yes.

Under Schedule 6 – Buying Rules of the Request for CUASPS2017 for the CUA the customer may seek to negotiate with the potential panel supplier(s) on quoted rates and/or services before finalising the order. If the customer and the contractor have negotiated any discount to the contract rates these must be specified and attached to the Order Form. Customers and/or contractors cannot negotiate fees in excess of those specified in CUASPS2017.

Do I have the ability to vary the standard specifications?

Yes. Under the Head Agreement for CUASPS2017 and subject to the ‘Buying Rules’ of the Request, the customer may modify its operational requirement specifications to meet its special needs by:

1. increasing, decreasing or omitting any part of the services under the Head Agreement
2. changing the character or quality of any services
3. requesting incidental Services not priced in the Head Agreement.

The contractor shall not vary the services under the Head Agreement except as requested by the customer in writing.

Am I required to use the contractor’s terms and conditions?

Two of the current CUA contractors have agreed to the terms and conditions of the Request for CUASPS2017 that incorporates the Department of Finance (Finance) Request Conditions and General Conditions of Contract (August 2012). These terms and conditions are intended to protect employers and employees who are using this CUA. Do not sign any alternative terms and conditions.

Two CUA contractors – Remserv and Maxxia have negotiated a sole departure with Finance in the relation to the provision of CUA performance reviews and measures. Should you require information in relation to this departure please contact the contract manager.

What do I do if the service required is not covered by this contract?

Where a State agency requires services that are not covered by this contract, check if there is another CUA that you may use. 

Before you seek quotes from a competitive market, please consult the contract manager to determine if the service that you require can be added onto the CUA. There are provisions under the Head Agreement (Clause 17) that allow the Contract Authority to add new services, such as:

• new concessionally treated and / or exempt benefits salary packaged items

• new otherwise tax deductible benefits salary packaged items

• new services released in Australia by the Contractor

Do I have to accept a delivered service?

Not if they don’t meet the specifications or service levels specified in CUASPS2017. Services supplied by the contractor pursuant to this agreement will substantially conform to the default operational requirements in respect of the services supplied and where a variation by a client/customer applies, then those specifications supplied by the client/customer will apply.

If the services delivered do not meet the specifications, the contractor will be responsible for effecting/arranging to meet the requirements of the specification.

Any expense incurred by the contractor while attempting to rectify faulty services will be borne by the contractor.

Does this contract meet legislative requirements?

Yes. This Common Use Arrangement is designed to meet all legislative requirements. It has been developed as previously consulted with the Department of Commerce and various State agencies.

The Department of Commerce has established Guidelines for Salary Packaging in the WA Public Sector 2005 - amended (Circular to Departments and Authorities No. 04 of 2012) and these guidelines should be read in conjunction with this Buyers Guide.

How do I terminate services and orders?

Before you terminate services or orders with a CUA supplier, consult the contract manager. The terms and conditions for this CUA have provisions for termination of the customer contract (Pick and Buy Order Form) which should be exercised with caution (e.g. if a default occurs).

Employees who would like to stop ‘salary packaging’, should speak to their relevant HR officer. The contractor offering them the services will also need to be immediately advised once the employee has finalised the details with their employer.

Will employees be liable for any fees or additional payments if they terminate a novated lease early?

Yes, there may be fees and payments associated with the termination of a novated lease.

Employees will be liable for all remaining fortnightly/monthly payments on the early termination of a novated lease. There may also be other fees.

Please discuss this with your service provider, car dealership and financial advisor prior to entering or signing any lease quote or deed of novation.

How do I know if the Contractor will provide me good services?

The contractors have nominated several referees in their tender response. Should you wish to contact any of the referees nominated, please contact the contract manager for more details.

Are there provisions for employers to manage risks?

Yes. There are many provisions established within the Common Use Arrangement terms and conditions for employers to control and/or reduce risks.

Employers are encouraged to monitor performance through regular reports or employee feedback to limit possible risks. Risk management strategies within the CUA include:

• Audit Strategy
  • Under Clause 1.1.9 of the Request for CUASPS2017, the contractor must provide to the Contract Authority, within 4 months after the end of each financial year, a certificate or certificates from an appropriate qualified auditor or auditors in favour of the contract authority as to:
  • The accuracy and completeness of its latest current financial statements including but not limited to the Operating Statement of Financial Performance, Statement of Financial Position, Statement of Cash Flows, and notes forming part of the financial statement and certifying that these financial statements are based on proper accounts and presented fairly in accordance with applicable Accounting Standards and other mandatory professional reporting requirements; and
  • The accuracy, completeness and reliability of processing performed and applications used to support the delivery of services and systems including but not limited to:
    • availability;
    • security;
    • data integrity;
    • change management; and
    • disaster recovery plans and procedures.
  • The Contract Authority may request a sample of working papers to justify the findings outlined in the auditor’s certificate.
• Ad hoc Auditing and Contractor’s Management System
  • Under clause 1.1.9 of Schedule 2, ‘Specifications/Statement of Requirements’ for CUASPS2017, the Contract Authority shall have the right from time to time at its absolute discretion to monitor through its own internal auditors or any other approved auditor the performance of the contractor and all processes used by the contractor in the provision of services under any customer contract.
• Other Reports
  • Under clause 1.2.3.12(i) of Schedule 2, ‘Specifications/Statement of Requirements’ for CUASPS2017, the Contractor will produce additional reports upon request from employers at no cost to the employer. Such reports may be called from time to time by the employer to manage risks.
• Regular Reporting To Employees
  • Under clause 1.2.3.8 Schedule 2, ‘Specifications/Statement of Requirements’ of the Request for CUASPS2017, the contractor will provide a facility to enable employees to gain access to details of their contributions and distribution and/or transfers for the past ninety (90) days, current account balance and details. This means that employees will have the ability to identify if there are any irregularities in the management of their packaged salary.
• Reconciliations of Salary Packaging Arrangement
  • Under clause 3.11 of Schedule 2, Specification/Statement of Requirements for CUASPS2017, the contractor will forward quarterly reports of transactions to all employees at their home addresses (or via other agreed means such as email).
  • The contractor will also provide a system which will allow employees access twenty-four (24) hours a day, and gain "read only" access to a transaction employment for the last ninety (90) days and to view their current salary package distribution and/or transfer account balance (and in the case of a novated motor vehicle lease, the details of distribution and/or transfers with respect to their fuel card monthly). Employees will have the option printing the reports accessed in this way. Access to personal records will be controlled by unique code and Personal Identification Number combinations.
• Individual Bank Accounts
  • Under clauses 1.1.7 and 1.2.3.6 of Schedule 2, Specification/Statement of Requirements of the Request for CUASPS2017, the contractor shall establish a bank account for each employer and the employer from time to time may require such other bank accounts, wherein all monies received from employers will be deposited. The employer has the right to check the transactions in the bank account. The bank account must be a trust account.
• National Police Clearance Certificate
  • Under Clause 18.4 of the Request Conditions and General Conditions of Contract (August 2012) covering this CUA, the Contract Authority or the customer may request the contractor, at any time and from time to time, to obtain and provide it with an Australia-wide police clearance in respect of any contractor personnel.

The contractor must comply with that request within thirty business days of such request.

What are the indemnity and insurance provisions of this CUA?

Under the Head Agreement for the Request for CUASPS2017, the contractor is required to maintain insurance policies to the satisfaction of the Contract Authority (Finance) to cover its liabilities to the Contract Authority and customers as follows:

• A Public Liability Insurance policy covering the legal liability of the contractor and the contractor’s personnel for an amount of not less than $20 million for any one occurrence and unlimited in the number of occurrences happening in the period of insurance;
• A Professional Indemnity Insurance policy covering the legal liability of the contractor and the contractor’s personnel under the Customer Contract, if awarded, arising out of any act, negligence, error or omission made or done by or on behalf of the contractor, or any subcontractor in connection with the contract for a sum of $5 million for any one claim and in the annual aggregate, with a provision of one automatic reinstatement of the full sum insured in any one period of insurance. Professional indemnity insurance required under this clause must include:
  • fraud and dishonesty;
  • infringement intellectual property rights;
  • loss of or damage to documents and data; and
  • breach of Australian Consumer Law.
• A Fidelity Insurance policy (including computer fraud) covering loss of money or goods by any Employee or person engaged by the contractor while acting for and on behalf of the contractor for an amount based on the greater of the following:
  • the service provider’s fortnightly throughput under the Customer Contract (i.e. dollar value salary packaged per fortnight by employees); or
  • a minimum of $1 million.
• A Workers’ Compensation Insurance policy in accordance with the provisions of the Workers’ Compensation and Injury Management Act 1981 (WA), including cover for common law liability for an amount of not less than $50 million for any one occurrence in respect of workers of the Contractor.
• An Information and Technology (Cyber) Liability Insurance policy covering the legal liability of the contractor and its employees for any claim arising out of an actual or alleged:
  • breach or public disclosure of personal or corporate information whilst in the care custody or control of the contractor or by any person or entity engaged by the Contractor to collect, store or process information or data on behalf of the Contractor;
  • act error or omission by an unauthorised person or entity resulting in loss of or damage to the computer system (including hardware, software and data) owned or used by the contractor in connection with the services provided under the customer contract;
  • for an amount not less than $2 million in any one claim and $5 million for all claims in the aggregate during any one 12 month period of insurance. The insurance policy must be maintained for a period of at least 6 years after termination or expiration of the Customer Contract.
• A Motor Vehicle Third Party insurance policy covering legal liability against property damage and bodily injury to, or death of, persons (including bodily injury gap protection) caused by motor vehicles used in connection with the Services for an amount of not less than $30 million for any one occurrence and unlimited in the aggregate.