Use of ‘regtech’ would simplify complex award system and de-risk landscape for small business, Kate Carnell says
Employers who use approved payroll software could be provided “safe harbour” against prosecution and penalties for wage underpayment under a plan put forward by the small and family business ombudsman.
Kate Carnell made the call in her Covid-19 recovery plan, published in May, and on Monday confirmed to Guardian Australia the proposal is being considered as part of industrial relations roundtables between unions and employer groups.
The revelation comes as Labor’s shadow cabinet and party room consider new legislation to regulate the second phase of jobkeeper, which would allow legacy employers no longer eligible for wage subsidies but still suffering revenue downturns to cut workers’ hours by up to 40%.
Under Carnell’s proposal, the Fair Work Ombudsman (FWO) would endorse regulatory technology or “regtech” solutions – payroll software incorporating awards that determine workers’ pay rates – to improve business confidence workers are being paid correctly.
Carnell’s recovery plan argues that due to award complexity it is “inherently difficult for businesses to be fully compliant” and the government should “de-risk the landscape for small business by providing a ‘safe harbour’ where they have acted in good faith”.
Businesses found to have accidentally underpaid staff after relying on the tools approved by government would be able to make good by providing backpay with no additional penalties.
Guardian Australia understands the proposal has been discussed in the award simplification and compliance industrial relations roundtables, set up by the attorney general, Christian Porter, to propose jobs-boosting reforms by September.
Carnell, who is not a member of the panels, told Guardian Australia she thinks there should be an “approved regtech solution” to help turn “complex legislation into usable forms”.
“We put it on the table [in May]. The industrial relations roundtables are looking at the issue of award complexity. I understand it is being discussed and that’s a good thing.”
Carnell also reiterated her calls at the National Press Club in July for a small business award to allow more flexibility for employers to set pay and conditions, suggesting it could be incorporated as a schedule into all modern awards.
This would allow employers of a certain size to vary award conditions by setting single minimum rates of pay or standardised breaks, she said.
Both changes are likely to provoke fierce resistance from Australian unions, who have called for higher penalties for underpayment and already warned that no worker should be worse off as a result of proposals out of the roundtables.
On Sunday, the Australian Council of Trade Unions launched its new For the Workers campaign, promising to stand up for the “hidden heroes” of the Covid-19 crisis.
“When the big business lobby talks about ‘flexibility’ and ‘reform’, it is code for cutting wages and removing your rights at work,” campaign material states.
“While workers are carrying Australia through the Covid-19 pandemic, the lobby groups for Australia’s largest and most profitable big businesses are trying to exploit the crisis to wreck wages and give themselves more power,” it claimed.
The IR roundtable talks are top secret, but in July Guardian Australia revealed technical experts KPMG were suspended from two sessions for publishing a discussion paper proposing wide-ranging changes including FWC powers to allow employers to cut hours and changes to the better-off-overall test that could water down protections on pay and conditions.
KPMG proposed the FWO should be able to make binding rulings so ambiguous provisions cannot result in backpay claims.
KPMG called for the ombudsman or the Fair Work Commission (FWC) to develop “payroll coding rules … for each modern award, to be adopted by businesses in setting up their payroll systems”.
“These payroll coding rules could deal with complexities that arise from complex work time scenarios, such as where multiple and overlapping penalties and loadings are triggered in a pay period.”
The use of regtech to simplify Australia’s industrial relations laws has also been canvassed at a Senate inquiry on financial and regulatory technology, due to report next week.
Tanda, an Australian technology company, submitted to the inquiry that the government should develop a rating system to inform businesses “which off-the-shelf payroll calculation technology provides a compliant solution when used properly”.
It also proposed the government could amend the Fair Work Act “to make investment in compliant payroll calculation technology a factor that courts must consider when imposing civil penalties in the case of underpayments”.
At a 14 July hearing, Tanda’s head of strategic partnerships, Rod Schneider, said the FWO currently “makes no guarantees about the advice it gives” leaving employers in doubt about whether they are paying workers correctly.
“This doubt must be removed to give employers and employees certainty.”