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Staff underpayment: How to make sure you payroll right

Underpayment of staff is a hot topic right now, with leading Australian companies like Woolworths, Commonwealth Bank, Bunnings, Qantas and many more not getting it right. This leads to the question: why is payroll so problematic?

Modelling by big four firm PWC estimates that Australian workers are underpaid by A$1.35 billion in entitlements each year, affecting 13 per cent of the workforce.

The vast majority of employers want to do the right thing when it comes to their workers payroll. However, with many adopting a set-and-forget approach, underinvesting in payroll systems and processes, combined with the complex nature of our industrial relations system, there is a very high chance of an employer inadvertently making a mistake. Small mistakes over several years can suddenly become very large numbers.

So, you might ask, what should I be doing in my business to make sure I am getting payroll right?

For smaller employers, a good resource is the Fairwork Ombudsman website which publishes a wealth of information in relation to workplace entitlements, including awards and agreements and pay and leave calculators, and pay slip and record-keeping requirements.

Many industry associations also provide employment relations advice to their members.

For any employers who have their own in-house payroll, you should ensure all payroll staff are properly trained, with a minimum of a Certificate IV in payroll administration and have keep up to date with changes in the awards.

If you don’t have dedicated payroll staff, you could also consider using an online Human Resources Information System (HRIS) to automate your payroll. These typically incorporate all modern awards and pay rates as well as offering in built award interpretation smarts, to deal with any complexities. The end result is a streamlined process to calculating your employees pay with total hours worked, penalty rates, specific time periods and special duties accounted for.

Also consider an annual payroll compliance audit as part of your payroll processes.

For any of you who are employees, you too, should pay more attention to your payslips. Ask yourself, are you getting paid all the overtime and penalties you should be? Is your super being calculated and paid on the correct things? Are your leave entitlements being calculated correctly?


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