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Corporate Australia faces payment errors

An extensive survey of payroll employees has revealed that corporate Australia faces higher risk of employee payment errors. 

In FY2022, the Fair Work Ombudsman retrieved over $530 billion in unpaid wages and entitlements for nearly 400,000 employees, with big corporate employers being liable for over half of these payments. This amount is thrice the sum recovered in FY2021 and over four times that of FY2020.

Over the past few years, numerous cases of industrial-scale staff underpayment, including the recent Commonwealth Bank scandal where thousands of employees were underpaid by over $16 million, have garnered significant media attention.

A recent survey of payroll employees indicates that one in four individuals working in payroll for large companies is considering resigning. Payroll employees in large companies are experiencing the highest rate of burnout, with 46 per cent reporting burnout compared to 28 per cent in small companies (under 50 employees) and 35 per cent in medium-sized companies (51-500 employees).

Moreover, large companies have the highest proportion of payroll staff whose workload has increased since the pandemic, with 57 per cent reporting an increase, compared to 43 per cent in small companies and 50 per cent in medium-sized companies.

The survey revealed that, among those experiencing burnout, 49 per cent cited lack of leadership, 40 per cent cited lack of resources, 39 per cent cited lack of investment in payroll, and 36 per cent cited unrealistic deadlines and expectations.

Tracy Angwin, CEO of the Australian Payroll Association, commented that in their audits, they have observed inefficient utilization of payroll staff and technology. Payroll professionals are performing manual tasks that could be automated, leading to higher costs and increased risk of errors. Overpayments are also regularly identified in their audits.

“Perhaps the most alarming thing we see is the trend of senior management not understanding the payroll structure required to ensure a well-governed, compliant and efficient payroll. The number of senior company executives quietly admitting to us that they have no idea what is going on in their company’s payroll function is astounding. With the increasing wage theft laws coming in and liabilities on executives and company directors, employers cannot just hope that their payroll people get it right, and without any oversight. We find errors in 100 per cent of our payroll audits.

“Many payroll teams are overworked because they use poor processes and technology and just don’t have the skills and technical knowledge they need. They rely on technology that often hasn’t been checked in years, and this technology reliance is the main cause of most of the underpayments published in the news over the past few years. There is very little time, if any, spent checking that the payroll is compliant. How many times do we hear CEOs blame ‘the system’?”

Given the current battle for payroll talent, resolving this situation is challenging. However, Tracy believes that investing in the payroll team to improve retention and engaging external specialists to perform regular payroll function reviews to identify inefficiencies is the most effective approach.

Tracy warns that an increase in underpayments and non-compliance with employee entitlements is almost certain without action. Companies are now under greater scrutiny for fulfilling their obligations regarding employee payments, and a lack of compliance can result in significant fines and reputational damage. Organisations must have access to specialist support through their payroll departments to avoid a potential payroll crisis.

As the developer of Australia’s first recognized payroll qualifications, including the Certificate IV in Payroll Administration and Diploma of Payroll Management, and the founder of the registered training organization, Australian Payroll Institute, Tracy believes that her organization is uniquely positioned to address the lack of knowledge and training in the business sector, company by company.

Tracy says: “We review end-to-end payroll operations to ensure compliance and optimise a company’s processes, efficiency, governance and controls.

“It also offers a payroll compliance audit to ensure employment obligations are met, awards and enterprise bargaining agreements are correctly interpreted, and leave calculations are in accordance with relevant state and territory legislation.”

The full report can be downloaded here: https://austpayroll.ac-page.com/2023-payroll-survey-download.

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Yajush Gupta

Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

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