Why add payroll comparison to your workforce management tools?

A glance at the media release page from the?Fair Work Ombudsman?(FWO) shows how much of a problem there is with accurately paying staff. In a recent media release, the FWO announced that they recovered?half a billion dollars in unpaid wages?from 2021 to 2022, affecting over 384,000 employees – which is just what has been ‘recovered’. Well over half of this came from large, corporate companies.

The issue of underpayment is far from a new problem – as a result of similar cases in preceding years, a Senate Inquiry was commenced on 13 November 2019. After several years and 130 submissions, the?resulting report?was finally released in March 2022 and made nineteen recommendations. The first was a recommendation that the Australian Government prioritise amendments to the Fair Work Act 2009 to criminalise wage theft in Australia.

Underpayment is also a broad term – it can stem from any number of areas such as fundamentally flawed calculations, inaccurate accruals of time, incorrect interpretation of rules, or simply not considering the Better Off Overall Test (commonly referred to as BOOT).

What are the rules regarding staff payments in Australia?

The FWO enforces?strict regulations?on staff pay, and companies must maintain compliance with the National Employment Standards (NES) and the Modern Awards for a particular person’s industry and occupation. These include regulations such as paying the minimum wage, accounting for overtime, and including paid leave in their earnings.

In Australia, failing to pay someone for work completed or their entitlements constitutes wage theft, which can incur heavy fines and penalties. Victoria and Queensland recently passed laws that state wage theft as a criminal offence.

Wage theft can take many forms. It can happen when an employer does not pay the correct award rates or pays workers ‘under the table’ in cash. It can occur when an employer requests someone to work hours or overtime without adequately compensating them. Or it can happen by misclassifying workers or through incorrect calculation of entitlements like allowances and leave.

What are the penalties associated with underpaying staff?

While many of these instances of underpayment may be accidental or unintentional, the result is the same as if they were deliberate: staff receive incorrect compensation for the work they have completed.??

Penalties for non-compliance with staff pay laws can be significant, so you must understand your obligations as an employer.

If the FWO finds out that you have underpaid employees, they can take several actions against your business. The penalties include the following:

• The court orders you to back pay employees for unpaid wages.
• You may also incur additional penalties of between $12,600 to $126,000 for wage theft against an individual or between $63,000 and $630,000 for wage theft across a company.
• In Victoria and Queensland, wage theft is a criminal offence that garners criminal charges and can result in jail terms of up to ten years for directors and officers of a company.

How do payroll comparison tools work?

Tambla’s PayCE solutions calculate payroll results to a high degree of accuracy through sophisticated configuration and provide an offline comparison of the actual pay against an external model.

Our software receives data from your timesheet records, roster and payroll system to model the results and provide meaningful, visual insights for managing employee wages. These insights enable you to analyse each pay period, highlight areas of concern and allow you to take corrective action quickly.

Why do you need payroll comparison?

Now, more than ever, companies and organisations of all sizes are paying increased attention to the underpayment of their staff.?They look at ways to help highlight issues before they become significant problems, remediate them quickly, and take action to prevent the same issues from reoccurring.

When it comes to payroll, many companies have relied on their payroll software to provide the answers. Like any software system, the output is only as good as the input and the calculations or logic applied to the data. The wrong mix of information is a recipe for disaster.

Unless regular maintenance is applied, external validation sought or third-party auditing completed, the system’s configuration for calculating your pay can fall behind current rules and regulations. Add to this the knowledge drain that can occur with staff movement in your payroll team, and you can easily miss critical manual processes.

Payroll can be one of an organisation’s most heavily regulated and complex processes. The teams looking after the payroll function are often small. They can work under immense pressure, and the systems need (but do not always get) regular investment to maintain them.

Making changes to such a critical set of tools carries considerable risk, and can be seen as challenging. As a result, investment in their maintenance can be delayed and compound problems over time. More companies are looking to complement their existing systems and processes with tools that compare against a known, validated or audited benchmark.?

How Tambla’s workforce management tools help

Australia’s stringent workforce compliance rules mean that you need a solution for interpreting modern awards and enterprise agreements, calculating complex pay rules and tracking hours worked by employees.

While Payroll Comparison is an emerging technology in its own right, companies like Tambla have provided these capabilities for many years through Award and Agreement Interpretation Engines designed to accommodate Australia’s complex industrial instruments.

Our software can help to reduce the complexities of the calculations associated with ensuring your staff are paid correctly for hours worked. We support your payroll operations by ensuring they have the necessary insights into their process in accordance with the employment frameworks. We can provide advanced payroll comparison solutions to handle your payroll compliance.

Visit our?Tambla PayCE?page for more on our capabilities.