Failure to automate and digitise payroll risks non-compliance and even wage theft.
Why risk millions by getting payroll wrong?
Wage theft is a complex legal issue that can be hard to diagnose and even harder to fix, especially if business leaders don’t have the knowhow to manage their payroll correctly. If people aren’t paid accurately or on time, it can affect an organisation’s cash flow and risk profile. And looking at Australia’s current wage system, it’s clear that more needs to be done.
A recent senate inquiry into widespread underpayment across the nation found the unlawful underpayment of employees was “systemic, sustained and shameful” and that the current regulatory framework was “inadequate for pursuing wage and superannuation theft”.
Following recent wage theft accusations against some of the country’s biggest companies and the findings of the senate inquiry, it is evident that employers need to take compliance measures more seriously. This is important when considering both underpayment and overpayment of workers.
The head of the Association for Payroll Specialists, Jason Low, says: “We have seen three-in-four audits conducted to reveal both overpayments and underpayments, with some errors costing employers millions of dollars.”
The Fair Work Commission’s announcement of a 5.2 per cent increase to the national minimum wage and an increase to award rates of 4.6 per cent or $40 per week means that employers now, more than ever, need to understand their payroll responsibilities.
The right tools to navigate this changing environment will help organisations remain compliant and also ensure positive employee experiences in a market where 66 per cent of employees are a flight risk and pay continues to be a top motivator for talent. Here are some ways to get started and enhance payroll practices.
Digitise data and information
Digitising payroll data and reducing or eliminating paper documents saves time and effort. It can save time, for example, when paying employees, generating reports and delivering key information – such as tax forms – to the workforce. Managing data and information digitally and within cloud software will cut back on inefficiencies and make it easier to keep accurate records from a remote environment.
Jason Low suggests digitising payroll data will also help organisations comply with Single Touch Payroll obligations. All employers are required to digitally report payroll data to the ATO after each pay run. With the introduction of STP Phase 2, employers are now required to report more detailed payroll data to the ATO and this newly expanded data set is shared with various government departments, including Fair Work.
“We expect the increased visibility of payroll data will expose potential payroll errors and lead to the auditing of employers,” says Low. “Companies need to ensure they have the processes and technology in place to run an accurate payroll each and every time.”
Use technology to manage compliance
Many organisations lack adequate talent or resources to keep up with constantly changing compliance requirements as well as other critical payroll activities. Understanding and applying legislative changes is time consuming, and many organisations will need to scale the payroll team as the business grows.
Technology that automates tax calculations can help cut through this complexity and allow payroll teams to save time, reduce risk, and scale more efficiently. Businesses that operate globally or that are looking to expand to new regions will need to stay on top of changing legislation in multiple countries and jurisdictions. Leveraging technology to automate tax rules in various locations can help reduce compliance risks so talent can spend more time focusing on strategic initiatives that drive the business forward.
Enhance the employee experience, reduce admin
Payroll and HR professionals have traditionally handled the paperwork and administration associated with updating employee records and information, which doesn’t leave a lot of time for other projects.
Mobile HR and payroll software can empower employees to take control of their records and reduce the administrative burden for in-house payroll teams, allowing more time for value-added activities.
Financial wellness may not have been a point of consideration for businesses in the past but given changing economic circumstances, ensuring that employees feel empowered and informed about their finances at work can go a long way towards building a healthy and productive workplace.
With advances in payroll technology, employees receive greater visibility into their payroll, allowing them to access their earning statements on the go. Changes to pay can be displayed at any time during the pay period, so employees can also get answers to potential payroll-related inquiries and ensure there is transparency across this area of the business.
Another essential ingredient to helping empower employees with their financial wellness is aiding their financial literacy. According to Ceridian’s pay experience report, over a quarter of employees surveyed across the region are unsure of their legislated or agreed working conditions, such as minimum wages and classifications, penalty rates, ordinary hours, allowances and breaks. Employers have an opportunity to help their workers by providing greater access to financial literacy tools and programs that can positively benefit employees’ financial wellbeing.
Getting pay right is only possible when companies have technology and processes that can keep pace with a constantly changing world of work. Leading organisations are moving away from outdated and disparate systems and investing in cloud-based software that combines pay, HR and workforce management in a single platform to help reduce the administrative burden, increase compliance, and get pay right.
Within the current economic and labour market context, businesses have no choice but to update their processes and leverage modern technology to help overcome complexity and run on time, accurate payroll — every time.
Brian Donn is managing director, Australia and New Zealand, Ceridian.