Monday 28 November - Creating Confidence In How People Are Paid
Knowledge Sharing: What is wage compliance? Our Guide
Many employers ask our?payroll consulting ?team what the most important thing is when considering compliance requirements for payroll.?The reality is there are a combination of factors and the causes of non compliance may be quite difficult to detect without actively looking for them.??
Our?Payroll Consulting ?practice regularly finds issues when conducting payroll compliance reviews that can be quite shocking for employers given that no one may have complained about an underpayment.?The large underpayments we have heard about over the past few years generally relate to relatively small payroll errors, that over time and a large employee population, can lead to material payroll underpayments.??
If you are a retailer that consistently pays part time overtime incorrectly or an aged care home that has the wrong sleepover rates in your payroll system, these errors can add up very quickly.
A full understanding all of the payroll compliance legislation relating to employment in Australia, will assist in identifying areas of risk or lack of governance in your payroll.
What is payroll compliance?
The terms payroll or wage compliance and alternatively wage theft, all relate to the incorrect payroll outputs from the times employees work and the conditions under which they are employed.
Some payroll errors are obvious, others require significant expertise to diagnose.
National Employment Standards
Most employees in Australia are covered by the National Employment Standards, or NES.?These are the minimum entitlements for employees no matter what award or agreement they are covered by.?The NES covers conditions such as annual, carers, long service, community service and parental leave, maximum weekly hours, termination, flexible working arrangements, conversion from casual to permanent and public holidays.
Both public holidays and long service leave are based on the State or Territory that your employee works and often have different rules of calculation.?The value of long service leave when it is paid could change based on the employee’s historical work pattern, weekly earnings, type of payments made, where the employee has lived during their tenure, whether the payment is leave taken or paid out on termination and many other criteria depending on the State or Territory.
An employer cannot negotiate any employment conditions lower than those provided for by the NES.?Employers must give every new employee a copy of the relevant Fair Work Information Statement so they understand their entitlements under the NES.
Failure to provide any of these conditions, including the necessary paperwork as evidence, will immediately make a payroll non compliant.
Australian Payroll Association offers a range of?Payroll Training ?options including?short courses . Learn more about NES to ensure you are compliant with the latest regulations.
Awards and EBAs, the industrial instruments
In addition, the conditions dictated by industrial instruments that your employees may be covered by as well as all State, Territory and Federal leave, industrial relations and taxation laws, and you have a long checklist for payroll compliance.
It’s important to determine exactly what award or awards apply to your group of employees as these can be significantly different.?Getting this step in the process wrong will potentially cause issues that can have material consequences in over and underpayments.
Employers need to consider the set of conditions that are specific to the industry and role undertaken and whether there is a Modern Award that provides coverage for the role.?It may also be that an employee has their own EBA which covers the role.
These industrial instruments will determine how the employee should have their pay calculated and what payments will make up their gross pay.?They could include how long an employee can work before they are entitled to overtime, when shift penalty rates apply, what allowances are payable, the standard span of hours that an employee might be expected to work within before their base rate changes, what rates they are paid, when paid and unpaid breaks are taken and a myriad of other conditions that might relate to the payroll outcomes for an employee.
Payroll configuration
Once the payroll inputs have been correctly calculated, they are processed in your payroll system.?The payroll system will determine the tax treatment of each payment, whether superannuation is payable, how each payment might contribute to the accrual of annual, carers and long service leave and produce the required outputs for your finance system and Single Touch Payroll.
However, a payroll system will only calculate what it has been set up to calculate.?That is, if a configuration is incorrect, not paying super on an element of pay that is superable for example, it will incorrectly underpay that superannuation every time, for every employee.?Over an employee population, across many years, these seemingly small errors can become materially relevant.?In addition to this, there can be consequences in terms of fines, contrition payments and negative media exposure.
What is a payroll compliance specialist?
Many employers are now addressing this risk by adding a compliance role to the payroll function.?The purpose of these roles is to put processes in place to avoid payroll errors and?check payroll outputs on a regular basis to ensure ongoing compliance.
In addition to this, all employers should have annual payroll compliance audits conducted by an independent?third party payroll expert ?with experience in awards and payroll legislation.?This is in addition to the standard program of internal and external audits that might already be in place to identify any incorrect taxation or governance weaknesses.
Specialist payroll consulting – we can help
The team at?Australian Payroll Association ?have experience in solving payroll problems of various complexities in most industries and for all employer sizes.?We immerse ourselves in the payroll industry which allows us to deliver a broad range of payroll capabilities.
We are not audit consultants doing payroll, not tax consultants doing payroll or HR consultants doing payroll. We are entirely focussed on diagnosing, solving and preventing payroll problems.
Did you know? - SCHADS Award
SCHADS Award – Did you know that payment for remote work has to be rounded up in 15-minute increments?
Training Event - Understanding SCHADS Awards
This course is suitable?for individuals who are responsible?for paying employees under the Social, Community, Home Care and Disability Services (SCHADS) Award. The course covers the different components?of the modern award which will impact on an employees' pay.
Delivered in a virtual environment, this course allows for interaction with our experienced trainers, and contains practice activities and example situations.
At the end of this course, learners will:
Book Here - Click
Industry News: Deel completes acquisition of Australian-Based Payroll and Human Capital Management Firm.
Deel Inc., a San Francisco-based global payroll and compliance firm, announced Monday it completed the acquisition of PayGroup by Deel ., a Melbourne, Australia-based payroll and human capital management company, for AU$121 million, or US$80.32 million.
The deal was?first announced?in June.
With the acquisition, PayGroup is now part of Deel and has been delisted from the Australian Stock Exchange. All team members of PayGroup have joined Deel.
Founded in 2017, PayGroup has a presence in Australia, New Zealand, India, the Philippines, Singapore, Malaysia and Japan.
“Together, we are building the first truly global solution in the payroll and HCM industry, giving businesses around the world the ability to hire, pay, and manage the best talent, no matter where they’re located,” Deel co-founder and CFO Philippe Bouaziz said.
“The completion of the acquisition scales our payroll and HCM expertise, expands our customer base in the region, and reinforces our leadership in the global payroll space.”
The combined company, with payroll coverage in more than 90 countries, plans to announce a new merged version of its software solution in H1 2023.
Deel was founded in 2019 and raised a $425 million?funding round ?in October 2021.
Knowledge Sharing: Rules and entitlements during the end-of-year holiday season
As the end-of-year holiday season approaches, employers and employees need to start planning how their businesses will operate during this time.
Many businesses get busier and may need their employees to work more hours and on public holidays. Other businesses may shut down (also known as a ‘close down’) or reduce their staff numbers.
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Requiring an employee to take annual leave during a shutdown
An employer can direct their employees to take annual leave while the business has shut down if their award or registered agreement allows it.
Most awards have rules about how and when an employer can direct their employees to take leave. An award may require an employer to give their employees a minimum amount of notice to take annual leave. An award may also provide that a business can only close during certain periods.
Each award and agreement is different, so employers should check theirs to make sure before they give employees any directions to use annual leave.
Example: Minimum amount of notice of a shut down
Joe is a full-time employee at a business that manufactures food products, including cheeses and dips.
Joe’s manager knows that December is a busy time for the business, so they schedule a shut down for the first 2 weeks in January.
The business is covered by the Food, Beverage and Tobacco Manufacturing Award. Joe’s manager check the award and see that they need to give their employees at least 4 weeks notice of the shut down.
In the final week of November, Joe’s managers notify Joe and the rest of the employees that the business will close from 2 January to 16 January and they will need to take annual leave. This is more than the 4 weeks notice required under the award.
If no award or agreement applies, employers can only direct the employee to take annual leave if the direction is reasonable.
For more information, see:
Employees without enough annual leave to cover a shutdown
If the award or agreement allows it, employees can agree with their employer to take:
Awards and agreements without shutdown rules
Employers can’t direct their employees to take annual leave during a shut down if their award or agreement doesn’t have rules allowing the direction.
However, employees can agree with their employer to take annual leave (including before they’ve accrued it) or unpaid leave during the shut down.
Unless it’s allowed under an award or agreement, employers can't require their employees to take annual leave before they’ve accrued it or to take unpaid leave.
Find out more about the?Rules for taking annual leave .
For more information, see?Not working on public holidays .
Working during a shutdown
If an employee continues to work when a business shuts down, they should receive their normal pay.
For any public holidays during the shut down, employees should still be given the day off without loss of pay or they should be paid the public holiday rates as per their award or agreement.
Working overtime or on a public holiday
Employers can ask their employees to work overtime or work on public holidays if the request is reasonable. An employee can refuse a request to work if they have reasonable grounds.
Whether this request is reasonable depends on several things, including:
When requesting that an employee work on a public holiday, employers need to consider all relevant circumstances.
Example: Reasonable request to work on a public holiday
Sam is a store manager for a business that sells personal electronics such as TVs and computers.
As the business is in the retail industry, Sam’s employer wants to open on Boxing Day to run a big promotion. Sam’s employer has asked her to work on Boxing Day.
Sam considers the request to be reasonable and agrees to work on Boxing Day. Sam understands that working on a public holiday is common for a manager in the retail industry.
If an employee works overtime or on a public holiday, their award or registered agreement may give them additional entitlements such as:
For more information, see:
Paying employees who don’t work on a public holiday
When a public holiday falls on a full-time or part-time employee’s usual work day, employers need to pay them their minimum pay rate for their usual hours. This applies even when an employee is on paid annual leave during a shut down.
The minimum pay rate doesn’t include any loadings, overtime or penalty rates that they usually get for working that day. An employee’s roster can't be changed to deliberately avoid this payment.
For more information, see?Not working on public holidays .
Resources for young workers and students
The holiday season often sees young workers and students in the workforce for the first time.
If you’re a young worker or student, you may be wondering about minimum working ages, how to prepare for your first day and what your pay and entitlements should be. Check out our?Young workers and students section .
If you’re an employer, read our?Employing young workers best practice guide .
More information
For a list of the public holidays over Christmas and New Year in your state or territory, see?Public holidays .
If you’re covered by an agreement, you can find it on the?Fair Work Commission’s ?website.
Payroll Training Brochure - 2023
To access the online brochure click here.