Here are some questions I’m asked on a regular basis by employers and journalists.
- What is the cause of the payroll underpayments?
- Are employers underpaying staff deliberately?
- Do you think criminalising wage theft will stop it?
- Will the 1 March changes relating to collecting start, stop and break times affecting 22 modern awards make a difference?
- Are Australian based systems better than those developed overseas?
Whether you are an executive, employee, union representative, regulator or payroll technology vendor will influence your views on this topic.
Payroll is an underestimated area of business by many, and to think there is a quick fix would be naive.
Having said that, after 26 years in the payroll industry, some historic practices are becoming very public for some employers.
While a solution to payroll problems may be a multi faceted approach, there are two things that stand out that have contributed to the spate of underpayments we have seen in the past 18 months.
Firstly, a ‘set and neglect’ mentality in relation to payroll systems. Systems are typically set up once and calculations are rarely checked for compliance after that. Whilst legislation and industrial regulations change regularly, there has been a general lack by employers to develop a robust cadence of assuring the payroll output calculations stay in line with these changes.
Secondly there has been a wholesale lack of investment in resourcing payroll teams, especially when it comes to ensuring knowledge is up to date. I’m constantly amazed when clients attend our training courses or complete our qualifications at the feedback that they learnt so much or had no idea about areas fundamental to running a compliant payroll. Payroll qualifications at a minimum of Certification IV and regular payroll training is key to de-risking the payroll function, no matter how long someone has worked in payroll.
There are many great payroll systems around, but just as Bill Gates won’t take responsibility for the errors in my excel formulas producing incorrect calculations, employers can not rely on payroll systems alone to run a compliant payroll function.
Only qualified and well trained staff along with a program of continual payroll governance will do this.
I’m hoping to be asked these questions less as less in coming months and years. However I don’t think we have seen the last of large underpayments in Australia yet. However I’m very keen to change the narrative on this topic. Rather than just focus on underpayments, let’s look at what can practically be done to raise the profile of payroll, especially in the key area of de-risking the employment function.
We need payroll leaders to step up and find their voices. Let’s do this together.
