Australia has one of the world’s most complex industrial relations systems, and even the largest and best-resourced organisations can find themselves struggling to stay on top of the rapidly changing compliance landscape.
The country’s business community was reminded of this reality recently, when several high-profile cases highlighted the risks of non-compliance with pay and record keeping obligations.
In each instance complex employment arrangement and gaps in record accuracy led to significant penalties and reputational damage for the organisations involved.
These matters have reinforced how even well-intentioned employers can face compliance challenges when dealing with intricate award structures, varying shift patterns, and evolving legislation.
They also demonstrate the importance of maintaining transparent, well-documented payroll practices and proactively reviewing internal systems to identify potential vulnerabilities before they escalate.
No industry is exempt from being subject to these sort of claims, including higher education institutions, media companies and charitable organisations.
The buck stops here
A payroll compliance dispute has the potential to damage more than just the bottom line of the organisation that stands accused. Negative publicity and reputational damage can be every bit as costly as a rectification bill.
And then there are legal risks to consider.
Under the Fair Work Legislation Amendment (Closing Loopholes) Act 2023, which came into effect on 1 January this year, intentional underpayment of wages can constitute a criminal offence.
As a result, wage theft now attracts not only a significant penalty – the greater of three times the amount of the underpayment or $8.25 million for organisations.
Additionally, for guilty individuals the maximum fine will be the greater of three times the amount of the underpayment or $1.65 million – as well as the possibility of a jail sentence for the business leaders deemed responsible.
Importantly, we note that the criminalisation for intentional wage underpayments do not include honest mistakes.
That’s a powerful incentive to get it right the first time, every time.
Reviewing your payroll operations
Conducting a thorough review of your payroll and HR operations is the first step towards protecting your business from making the headlines for an incidence of non-compliance.
It can pay to engage an external industrial relations specialist who has up-to-date knowledge of the legislation that’s relevant to your business and who can provide expert guidance on how any applicable Awards should be interpreted and applied.
There are a plethora of organisations offering this service, from major consultancies and boutique providers through to TAPS, the peak industry body for the payroll sector.
It provides Payroll Health Check services for businesses of all stripes and sizes. You can also gain rapid insights into possible payroll vulnerabilities by completing the Dayforce online assessment.
Very often it’s the little things that can trip businesses up – the rounding down, rather than up, of additional minutes worked at the end of a rostered shift, for example, or the classification of workers who straddle two or more roles simultaneously.
Muddling along in manual mode
The next step? Auditing the systems you use to manage your payroll and employee entitlements to determine whether they’re helping or hindering you in your compliance quest.
If you’re using printouts and spreadsheets to create rosters, track employee hours and calculate entitlements, it’s more likely to be the latter.
Remaining compliant is becoming increasingly difficult. A recent Dayforce survey found that 70% of global payroll professionals believe compliance has gotten more complex over the past two years.
Enterprises operating in manual or semi-manual mode are at higher risk of making compliance errors than those that have modern, well-configured HR and payroll platforms in place.
Using standalone solutions for HR, payroll and rostering can, for example, make it harder to track whether employees possess the requisite qualifications to work unsupervised, have had sufficient breaks between shifts and received the correct overtime.
Embracing the automation advantage
That’s why a growing number of Australian businesses are embracing automation technology to help minimise compliance errors across the entire rostering and payroll cycle.
You can have greater confidence you’re doing things by the book if you partner with a vendor that invests in compliance and is dedicated to supporting its platform to reflect the latest changes to local employment legislation and Awards.
You’ll also be able to maintain records the Fair Work Commission may expect you to produce, should your organisation become the subject of a payroll dispute in the future.
Squared away: Setting your organisation up for a stronger future
A compliance drama can be costly to rectify and a distraction from your core business. Fortifying your people and payroll functions may reduce the likelihood of your enterprise becoming embroiled in one.
If you’d like to start the new year on the right foot, now is the time to get your platforms and processes in orde
