As the number of large businesses, including the Reserve Bank of Australia, facing significant underpayment issues continues to rise, Fair Work Ombudsman Sandra Parker, in her final address, emphasised the need for employers to invest in assuring payroll systems were compliant. She stressed the importance of regular audits, accurate payroll and record-keeping, and support for payroll teams.
Parker reflected on the history of underpayment cases, starting with the notable 2018 Calombaris underpayments that amounted to $7.8 million. She mentioned more recent instances of self-identified underpayments, such as Woolworths ($571 million), BHP ($430 million), 7-Eleven ($173 million), Merivale ($130 million), Coles (over $100 million), BUPA ($75 million), and many others. These examples represent just a fraction of the underpayments discovered in recent years.
While acknowledging the initial challenges faced by the Fair Work Ombudsman in responding to the 2018 underpayments, Parker emphasised that the size and sophistication of a business do not guarantee compliance. She urged all employers to recognise the lessons from these cases and invest in robust systems while providing support and training to those involved in payroll operations.
Parker highlighted that systems are only as effective as the information entered into them and that human decision-making and actions play a crucial role in compliance. She stated that proper independent auditing could have prevented many of the large-scale underpayment incidents. Despite the disappointment of widespread underpayments, Parker found encouragement in the growing trend of businesses, regardless of size, engaging in structured auditing programs to detect and rectify issues promptly. This commitment to ongoing auditing, if maintained, can help identify and eliminate systemic issues before they escalate, benefiting both employers and employees.
Ross Heron, COO of Australian Payroll Association, acknowledged the complex and evolving employment compliance landscape. Heron stressed that despite the challenges, a compliant payroll operation was possible with the right investment in people, systems and governance, and businesses must understand the risks and implement appropriate controls. Regular independent auditing was highlighted as a crucial control for businesses of all sizes.
Different levels of business operation and independent auditing, support, and guidance are available and appropriate for businesses. For smaller businesses, an industry specific Payroll Health Check would be more suitable.
Independence was stressed as a crucial factor in audits, as relying solely on internal personnel might lead to overlooking issues deemed routine.
At Australian Payroll Association, we strongly agree with Sandra’s sentiments. Payroll is not just a standalone function; it is an all-encompassing business solution that relies on cross-functional collaboration and human inputs to drive compliant and accurate outcomes.
If we were to compare a payroll professional to a Formula One driver, their primary responsibility would be skillfully navigating a car around the track. However, to achieve success, they depend on critical inputs such as the right amount of fuel and tires. Similarly, your people and pay strategy, along with supporting processes, require collaboration across various teams and functions, including Talent Acquisition, People & Culture, Finance, Functional Managers, and Payroll.
Let’s work together to ensure that payroll is given the attention and investment it deserves as an integral part of business operations. For more details on payroll consulting, training and membership, visit our website.
