Talking Payroll With Athena Koelmeyer

Athena Koelmeyer is the Managing Partner at Workplace Law, a specialist law firm focused on providing advice to employers in all aspects of employment law and workplace relations.

This is a fascinating conversation and one that both employers and payroll professionals should not miss.

Follow along with the transcription below

Tracy Angwin: Welcome to another episode of talking payroll. My name is Tracy Angwin. In this episode I speak with Athena Koelmeyer managing partner of workplace law, which is a specialist law firm focused on providing advice to employers and all aspects of employment law and workplace relations. Athena that has worked for many of the Australian Payroll Association’s clients to provide legal support and also supports APA with our employment arrangements. I’ve known Athena for many years and I must say she has some of the most hilarious workplace stories, most of what she actually can’t talk about on this podcast, but even without them, I’m sure you’re going to enjoy this chat I have with Athena.

Tracy Angwin: The first question I normally ask my guests is how they got into the payroll industry. You’re not technically in the payroll industry, but you do have to deal with all the outcomes of the payroll industry if you like. So I’ll ask you instead what drew you to being a specialist in employment law?

Athena Koelmeyer: It was a sort of a natural transition. I found myself out of university thinking that I wanted to be a property lawyer and promptly went and got a job in property and then realized that it was about the most boring job that I could possibly imagine. So not knowing what else to do, I took the first job that was offered to me in the city and a litigation firm and wound up working for insurers dealing with dust diseases claims and other sort of major workers’ comp style litigation.

Athena Koelmeyer: And I really enjoyed that despite the fairly gruesome nature of some of it and the very sad consequences obviously of dust diseases matters. And from there I just sort of transitioned really into a work health safety law role and that really does go hand in hand with employment laws. So a few years after I started as a lawyer, I found myself fully fledged as an employment lawyer dealing with work health safety and everything else, employment. And over the years it’s become more employment and less work health safety as employers get better at work health safety and they don’t need me as much.

Tracy Angwin: And possibly get worse at employment.

Athena Koelmeyer: Well look, I’m very sympathetic to employers and that’s why our firm is set up to support only employers because if we don’t have employers then we’re not going to have any employment in Australia. And then we’re going to have big problems. But it’s such an unnecessarily complex system and there are so many permutations and combinations within just a simple employment environment that we have made it our mission to try and assist employers to navigate this unnecessarily complex thing that they have to deal with when they’re employing employees in Australia.

Tracy Angwin: And I must say you do it very well. I’m a friend and a client, so you have helped me out in a couple of matters and with contracts and things and this is something that amazes me. As soon as you employ someone, you are subject to the same rules and regulations as BHP and the Commonwealth bank. So all employees just have to get it right and if they don’t get it right, they need to get advice to get it right.

Athena Koelmeyer: I think that’s wise words. And unfortunately for many businesses, that advice comes too late because they find themselves in trouble and then try to fix it after the event rather than getting onto the front foot when they’re setting up.

Tracy Angwin: I mean you must see a heap of payroll stuff ups that result from all sorts of things that then require your legal expertise. In your experience, how much of this has got to do with the reliance on a payroll system that’s been set up incorrectly or is it a training issue? Where are these mistakes? Where are these issues coming from?

Athena Koelmeyer: I think it’s a good place to start at the beginning, which is the reliance on a payroll system. I think people buy a system out of a box that says that it will solve all of their problems. And of course payroll systems are a bit like lawyers and we operate in a ‘garbage in, garbage out’ environment. So if you don’t give us proper instructions, we don’t give you proper advice. And it’s the same with a payroll system. If you don’t set it up correctly and tell it that your employees are not actually maybe working 38 hours a week, it might be a not-for-profit and you might be working 35 but if you don’t tell the payroll system that then you’re going to produce an incorrect result and it’s going to cause problems for you down the track.

Athena Koelmeyer: Initial setup is so important and I’ve mentioned to you before that I think the vendors need to take a little bit more ownership of trying to assist maybe in a more proactive way or at least you know, maybe covering their bottoms a bit better by saying you will need to set this up and we will help you in so far as we can. Only you know how you employ people. So we need your data from you about award terms and conditions or enterprise agreement terms and conditions or your unique hours of work or your unique arrangements in relation to time off in lieu. And they must be correctly configured within the system in order for it to do all the things that it says it does on the back of the box. It’s inevitably there’s going to be underpayments or some sort of other claim that arises in six years of back pay for anything that’s been incorrectly configured from day one is a nightmare.

Tracy Angwin: It’s ugly. And I mean even if the vendors don’t feel that they are qualified or able to give that advice, perhaps at least they should be suggesting to their new clients that they go find the advice to make sure they’re doing the interpretations correctly.

Athena Koelmeyer: Definitely. And you know, even if you might be a big employer with a really sophisticated HR team, but if they’re not working together with payroll to make sure that payroll know what the terms conditions are that they are offering, then you know there’s going to be a lack of cohesion there within your own organization about what terms and conditions should be plugged in. So it really needs… and I know that it’s often done in a rush and it’s sort of like, Oh, we need to do it by one July, or it must be done because the business is being sold in three weeks time. Well, these things unfortunately take time to get right and they do require attention. It’s not just sort of like hit the green button, then it’s going to go and magically be okay. It requires time and consideration and dedication from the whole of the workplace.

Athena Koelmeyer: And vendors, I know that they’re often under pressure too, to deliver something that works by the due date, but if they’re not doing what they should be doing to support the employer to set it up correctly, I would suspect that they might have cranky people at some point saying, “Hey, you told us on the box that we could rely on your product and we actually can’t because it’s not calculating something correctly, or you didn’t tell us at the start that we should go get our own legal advice about how to make sure that long service leave accrues in the right way for South Australia. So you told us it would work and now it’s not working and now we’re very cranky with you.”

Tracy Angwin: I think there’s a couple of things on that. We see a lot of stories in the paper, the press loves a good payroll, bad news story. So we see a lot in the paper and particularly, the last ones we’ve seen, where it’s been quite useful for the employer to blame the software. “We had old systems, we had old technology.” But the reality is at some point, someone set those up, like a human set those up or some human made that decision to do those things. And the reality is that sometimes, like you say, if you go back six or seven years, no one’s been checking it for that long.

Athena Koelmeyer: Correct.

Tracy Angwin: And the other thing is you say that the leave, I mean I… So there’s that, which I do think is perhaps not necessarily the payroll vendors fault or responsibility, although they could do a lot to proactively avoid it. But one thing that does concern me from a vendor point of view is things like you mentioned, long service leave, because I’m yet to find, and I know that payroll vendors that are listening to this, they will be screaming down the podcast at me, but I’m yet to find a payroll system that correctly accrues managers and pays long service leave.

Athena Koelmeyer: It’s very difficult. And you know, it was sort of a massive disappointment when the national employment standards were introduced under the fair work act in the beginning of 2010 because we’ve got a national system for annual leave, we’ve got a national system for sick leave or personal carers leave.

Athena Koelmeyer: We still have a patchwork quilt– if you used to be covered by an old federal award, remember those that made provision for long service leave, then that’s what you have. Or it’s the provisions of your state or territory legislation. And we all know that the New South Wales Long Service Leave Act, for example, written in 1955 sounds like it’s written in 1955, is a horribly confusing piece of legislation that I really detest reading every time I have to do it.

Tracy Angwin: Well that’s when people went back to England on boats, right? And it took two months.

Athena Koelmeyer: That’s exactly right. And that’s the timeframe that you’re talking about that we’re now trying to apply in this day and age to an important entitlement for people. And it’s important to get it right. And I have a degree of sympathy for the payroll vendors who are trying to write a fancy algorithm to encompass 1955 legislation. That’s like a square peg in a round hole.

Tracy Angwin: Totally.

Athena Koelmeyer: But nevertheless, if you say your system will do it, then it probably should.

Tracy Angwin: I mean in the last 60 years, what’s happened to workforce flexibility, things like that in times of change. And then you get Victoria that just adds a new long service leave thing just randomly. What is that about?

Athena Koelmeyer: Oh, the 2018 legislation. Well it clarifies a lot of things and you know, I’ll say this for the Victorian government, cheers to you for actually modernizing your long service leave legislation and making it answer questions that come up constantly. So New South Wales could take a leaf out of the Victorian government’s book there and pay some attention to those sort of things that are important for employers in your state.

Tracy Angwin: But really will it be periods of parental leave accounting towards the…

Athena Koelmeyer: Yeah.

Tracy Angwin: That’s the bit, I think Victorians must be pretty cranky about that.

Athena Koelmeyer: I would think that they are cranky and will be cranky for some time. And the other thing that the Victorian legislation did in the past and still continues to do is deal pretty tightly with transfers of business. So it removes any sort of flexibility around, we don’t really want to take these employees with this long service leave. Well now you do. But I’ll say this for at least it’s clear.

Tracy Angwin: Well, there is that.

Athena Koelmeyer: As to what’s in and what’s out.

Tracy Angwin: Yeah, you might not like it, but at least there’s no gray areas. Right?

Athena Koelmeyer: Correct.

Tracy Angwin: How funny. I’m interested to hear what you think about this as well and talking about gray areas. One of my biggest frustrations when I’m working with employers is the fact that they haven’t had payroll at the table when they’ve been negotiating EBAs. I mean, typically these things are thrashed out, over months or even years and at the end of some sort of exhausting process of negotiation. Everyone involved does high fives with each other and pops a champagne to celebrate, then someone walks past the pay office and drops us an inch thick document on payroll’s desk and says, “Can you just make this happen?” So, I see payroll teams having to try and implement really difficult conditions that have been negotiated in a payroll environment that they might even have to be managed outside of the system because the payroll wasn’t actually involved when those calculations were negotiated. I mean it can affect all sorts of manual spreadsheets and things. What do you think about having payroll involved with EBA negotiations?

Athena Koelmeyer: I think they’re an essential part of the bargaining team because if HR or the local management team off on a tangent, negotiating something that simply will not work within the payroll system or which is impossible to account for in the time and attendance system, then you’re promising something to the staff or the union that’s just not going to work. And how do you think that’s going to turn out in the long run? That’s not going to look good and nobody is going to be happy. So I think, even if a payroll, and I can understand why they would not want to sit at the bargaining table, that should nevertheless, they deeply involved in the planning because every enterprise agreement should have a plan as to what you’re going to offer and where it’s going to go and how much it’s going to cost you.

Athena Koelmeyer: And that’s the other thing that I often find that employers have agreed to certain sets of terms and conditions and then when it’s put through the payroll system and they work out exactly how much it’s costing, they all hit the floor because they haven’t realized that what they’ve committed to is actually going to cost them a bomb by the time the implementation comes through. So something like, ‘yeah, yeah, yeah, you can have your birthday off every second year.’ If you, and I’m using a silly example, if you put it through the payroll system or work out that it’s going to cost you 100,000 for all of your staff in New South Wales, then maybe that’s something that you wouldn’t have agreed to at the time. So costings and practical realities of how things are going to work are very important to make sure that payroll is across it, can do it, can deliver it on time because you know sometimes that three inch thick enterprise agreement is required to be implemented within 14 days.

Tracy Angwin: Exactly. That’s the crazy bit.

Athena Koelmeyer: It is mad.

Tracy Angwin: I mean on the client side, many employers get themselves into trouble from a payroll perspective by making all sorts of assumptions that things are correct when they’re not. I guess a little bit like the set up of the payroll system, and from my experience that results in just underestimating when it comes from just underestimating the knowledge that the staff needs to run a compliant and efficient payroll function. Why is it that, do you think, employers underestimate the complexity of payroll?

Athena Koelmeyer: I think that there’s a lot of employers out there who still see payroll and indeed to a degree Human Resources, although they’ve been sort of knocking at the door for a lot longer than the payroll community has in terms of getting a seat at the table and getting a voice in relation to big decision making within organizations. And it’s something that I know you’re doing really well, Tracy, with APA and actually having the first ever qualification for payroll. Like who would have thought that there was not one.

Athena Koelmeyer: It still boggles my mind that, you know, it took somebody like you to have to come along and make one. But I think that probably that lack of “professional qualification” has meant that payroll gets treated like they’re just doing data entry and I don’t need to tell you or the listeners, it’s far, far more than that. And it’s so important to get it right and it’s so important to get the right people with the right training and the right understanding, operating that system. So it will deliver a compliant, correct cost effective outcome for the employer. You can’t just stick anybody in there and say, okay, here’s MYOB, off you go. That’s not going to work.

Tracy Angwin: And that’s the thing, we do quite a lot of payroll audits, payroll compliance audits, and a lot of people think that because they’ve had an auditor come in, they’ve kind of had a big four auditor come in and audit the payroll. Everything should be right. But, we never find or really would we find that there’s a tax calculation issue. It always seems to be the big problems that we see are problems that happen before the data even gets to the payroll. So it’s really in those award interpretations, it has the modern award caught up for some reason with the EBA and now they’re not coming, they’re not actually delivering to the minimum standards that they should be. So do you see many clients proactively checking this or did they sort of just assume that once they’ve got it set up it’ll be okay?

Athena Koelmeyer: I think ‘set and forget’ is a massive problem. Recently we’ve had a client who’s been challenged by an employer about the right way, I mean, and we know that accrual of sick leave is a big issue, but aside from that, the right way for annual leave to be accrued because the Fair Work Ombudsman sort of unhelpfully on their website says annual leave should it be accrued to, I think it’s 10 decimal places for every hour that someone works. Well, I don’t know how many payroll systems do it that way, but the entitlement under the act is four weeks accruing progressively throughout the year. So whenever you like really hourly, daily, monthly, whatever suits you, and as long as it adds up to four weeks at the end of 12 months, well that’s compliant. Right? Well, the FWO is going a little bit overboard, I would respectfully suggest, by saying it must accrued to 10 decimal places every hour.

But our client had, I think it was 2.92 so they had a two decimal place accrual system in place, which when you play it out actually works out to be 3.9 weeks, not four. So that’s an underpayment and that’s just because they’ve never, since they set it up in the first place and they took that number from the old payroll system when they transitioned to a new payroll system, and I didn’t even think about it and I don’t know what this… Well it’s not actually fine. It’s not sufficient to accrue to four weeks and four weeks is the minimum. So I was setting it and forgetting it and thinking that it’s all going to be right and don’t worry about it is a terrible idea. And I don’t think it has to be every year, but it should be with regularity.

Athena Koelmeyer: Any organizations should be having a look at their employment contracts and making sure that they’re still fit for purpose and making sure that my payroll system, whether that’s through an audit by an external organization, who knows what they’re doing, like you guys, not just a big four audit that gets done every year and becomes, in my experience anyway, a little bit of a tick and flick exercise. But somebody who knows what they are looking for, can sit down with your enterprise agreement and go, “Oh, did you know that two years ago you agreed that overtime was going to accrue at one and a half times for the first two hours and in double time thereafter. Whereas in the past it was three?” So you know, if you haven’t updated your system to reflect, the overtime is now double time after three hours then you’ve got years of underpayment there. Just cause you haven’t updated your system.

Tracy Angwin: I know, it’s funny, isn’t it? Even for me, my experience, I mean you wrote our original employment contract and I just kept employing people with it and I thought that was fine. And then, I can’t remember what it was, but I got you to check one, so I perhaps employed someone in a slightly different arrangement. And I said, “Can you just have a look over this?” And you were like, “Well, this contract doesn’t work for that person.” And I was horrified to think, well, yeah, of course it does. It’s an employment contract, but you know, the devil’s in the details. And that saved me from potentially a lot of bother down the track. So when we just got to be always revisiting in a sort of a continuous improvement mindset of these things.

Athena Koelmeyer: I think that’s right. Well, you know, if you were operating machinery, you wouldn’t let it go without a service for five years.

Tracy Angwin: That’s right. Exactly. It’s interesting because another, I guess another part of what I’ve seen you do, I mean, I laugh because I used to say to you, “Hey, we should go and have dinner on a Friday night or something.” And you used to say to me, “No, Tracy, if someone’s going to do something stupid in the workplace, it’s always going to be four o’clock on a Friday afternoon.” And ultimately what it comes down to is culture, the culture that we apply, someone does something stupid. And I think culture’s really, a huge part of both wider business but also in the payroll department. And often payroll can report to finance, sometimes we report to HR, but there’s always a sort of triangular relationship and that can work out really well. But sometimes there are challenges or even friction between those parties. Have you seen different cultures in different payroll environments that are either good or bad and what do you think the most important thing is when fostering a healthy payroll culture?

Athena Koelmeyer: I think a healthy payroll culture, well let me say it this way, payroll is always in a difficult position in any organization because it is part of the thin blue compliance line. And the organization may not think that it is, it may think it’s just an administrative function, but payroll is part of the guardian at the gate to make sure that compliance is being properly executed by the company. And now in this day and age of you know, accessorial liability and people who are involved in contraventions like paying people wrong, are all individually exposed. I know that payroll people take this stuff very seriously and it often results in potentially butting heads with someone who they report to who may not think it’s as serious as payroll is making it out to be.

Athena Koelmeyer: It is in fact that serious and it becomes a challenge for payroll people who are often buried in the numbers and are very, very good with systems and operations and compliance to actually be able to articulate in a way that will get the support of the organization for change, to get to the table and to persuade the powers that be within your organization that you need to be doing something differently or you have a compliance problem and it needs to be fixed, or you’ve detected this problem and it needs to be resolved because it’s got the potential to cost you lots of money down the track. So that ability to influence about compliance, I think now is a critical skill for payroll. The days of a payroll person sitting there and thinking, ‘Oh, I’m just paid to run the numbers’ are certainly long gone.

Athena Koelmeyer: And as part of your role as guardian of the gate, I think it’s important that you be able to communicate your concerns in a way that’s actually not going to wind you up in trouble or having big arguments or throwing staplers at each other at four o’clock on a Friday. It just really needs to happen in a positive way. And that’s a challenge. Like anytime anybody has to give anybody bad news or ask for a variation of something that you’ve been doing for a long time, it becomes a challenge. But yeah, the poor payroll cultures are the ones who in my experience just sit there and go, well, I’m just doing what I’m told and I’m not going to actually raise my hand and say something’s wrong. I think that’s a real abdication of responsibility by payroll, you are all better than that. And you know what is right and wrong and you should be raising your hand and saying so to the organization.

Athena Koelmeyer: And the other ones are the ones who just are incapable of communicating what they need in anything other than an aggressive way, which is going to result in them being ignored. So those are the two things that I think are important for payroll in relation to improving their culture or their status in the cultural balance within the organization.

Tracy Angwin: That’s interesting. I mean, on the other hand, I’ve heard you tell some stories without naming names, of course, it’s a very confidential environment, you are a lawyer. I’ve heard some stories of work you’ve done in the past where there’s been less than suitable payroll folk doing payroll. That’s given their employers huge headaches and just because they’re either wilfully incompetent or they’re just incompetent. And I’m sure that most of those examples are no longer in the payroll industry.

Tracy Angwin: But in terms of your clients who are mainly HR departments, I guess or business owners, what do you think, based on their needs, are the most important characteristics of a payroll professional?

Athena Koelmeyer: Well, it should go without saying that a payroll professional should be competent, they should know what they’re doing. And certainly we have had issues with people who have been in payroll for a long time, setting up a system across a complex environment with multiple different awards, but saying, “Oh no, you know, over time we’ll just accrue at this rate for everyone.” It didn’t accrue for this rate for everyone it was a massive problem. But you know, they purported to be a professional and purported to be able to set up a system and they clearly couldn’t. So being competent is the first thing, and it should go without saying, you shouldn’t be trying if you’re not competent.

Athena Koelmeyer: And the other thing is of course to make sure, if I was a payroll person starting in a new payroll environment, the first thing I would do is do my best to do my own sanity check and audit and make sure that the system that I was going to be working with was fit for its purpose. So if it was a terrible old system, I have to write it on a bit of paper and then upload it manually, and that may result in either I can’t do this job but I’m out. Can I find somewhere better for me? Or a direct conversation with the business saying, ‘okay, well if you want me to do a proper payroll job then you need to give me proper tools to do that and that means that I might need a better system than what I have right now in order to make this sort of compliant.’

Athena Koelmeyer: So those are sort of the first things that I would think about doing from a payroll point of view. So competence and ability to actually have the right tools to do the job to the standard that’s required, I think are the two key things that I would start with.

Tracy Angwin: Yes, great advice. I’ve known you for a long time and you’ve helped me get through some of my own sticky employment situations and certainly helped me avoid them as well with the types of contracts and assistance that you provide at Workplace Law. So thank you for that.

Tracy Angwin: Thanks for being on the podcast, but how… if people want to get in touch with you, what’s the best way for them to do that?

Athena Koelmeyer: Look, our offices are based here in Sydney. Our website is www.workplacelaw.com.au and otherwise you can always reach us by email at sydney@workplacelaw.com.au