5 reasons businesses need an ongoing, independent payroll compliance product
Despite many businesses investing increased time and resources into their payroll function, payroll compliance continues to cause ongoing uncertainty and complexity for many Australian businesses.
From Payroll Manager to Director, the uncertainty and complexity of payroll compliance reaches all levels of a business. Businesses want confidence that they are compliant, so here’s five core reasons why Australian businesses paying under modern awards and enterprise agreements need ongoing, independent payroll compliance monitoring.
Constant changes to awards and legislation
There are frequent changes to modern awards and industrial relations legislation. Since 2020 there have been 13 variations to the General Retail Industry Award 2020 (GRIA).
Some minor variations may not impact employee pay, however some significant changes we have seen like increases to penalty rates for casuals or changes to overtime rules for part time employees have the potential to change what an employee should be paid.
Changes may be incorrectly programmed into payroll systems, and errors may go unnoticed for long periods of time causing employee pay variances. The use of an ongoing product allows the business to quickly understand if errors are occurring and how they need to be corrected, before it becomes a serious problem.
Payroll systems and processes will never be perfect
If payroll systems and processes were perfect, we wouldn't hear about payroll errors. However, when payroll systems are implemented they are set in place and, by design, are difficult to alter, preventing them from being able to keep up with the business’ payroll needs.
In addition, time and attendance systems are heavily reliant on human interface. A great example of why variances in pay commonly occur is due to employees failing to punch in and out of shifts or breaks. Without an ongoing review of payroll data and employee pay errors like this can continue to compound overtime.
Underpayments can occur from minor changes
Employee pay variances can occur from small changes in payroll processes. One small shift pattern change, for an employee or a group of employees within a store, can very easily cause a variance in pay. As mentioned, payroll systems are never perfect, and a change in shift patterns may cause a trigger in certain clauses that the system has not been programmed to calculate, or calculate correctly.
With ongoing reviews businesses are able to regularly understand if this is occurring and make necessary changes to stop it from occurring again. Without ongoing reviews underpayments can go unnoticed, and compound overtime. This is the core reason we see so many underpayment stories in the media, errors caused by minor changes go unnoticed for longer periods of time and compound into large sums of money.
Independent reviews are key
When it comes to evaluating compliance, and validating what a business has paid their employees, having an independent review is key.
It provides an accurate overview and insight into current systems and processes without unintentional internal bias. It provides confidence to shareholders that the business is well equipped to manage and address any payroll challenges that may arise.
It increases the business credibility, using a reliable, independent company to assess payroll compliance tells employees and shareholders the business is not trying to hide anything and has their interests at top of mind.
The ability to prove and improve compliance
By analysing a business’ payroll data, against their own interpretation of the award or enterprise agreement, they get visibility and insight into their current compliance position. Obtaining records of how accurate their employee pay is and why variances have occured will allow them to prove and improve their compliance.
The ability to prove compliance builds confidence. Having physical records and proof of a business’ compliance level provides the luxury of being able to prove their compliance, whether that be to Fair Work, the board, investors or employees.
Through understanding why employee pay variances are occurring, including drilling down into clauses, stores and employees, businesses are able to make internal improvements to systems and processes. This could include changing roster principles, or increasing salaries so their compliance score increases overtime.