Payroll Award Interpretation and Compliance is the Biggest Issue on the Agenda for Business.
In so many cases brought to settlement, it is as much about errors and unintentional omissions, but the fact remains in today’s IR environment, such mistakes are the focus of the Fair Work Commission.
The reasons, in my opinion, are three-fold:
- The workload of payroll teams required to produce payroll is becoming more demanding.
- The lack of Payroll knowledgeable professionals who are leaving the industry because of the above and their costs
- The ever-increasing requirement, penalties, and back pay are available for the Business, Payroll Team Leaders, Management and Directors in getting payroll wrong.
The solution must include:
- The payroll software system must incorporate the Employee IR process from Onboarding, Rostering, Timekeeping, Timesheet, and automated Award Interpretation from the approved and accepted timesheets.
- Facilitate direct employee advice to their device of Rosters, Timekeeping, approved Timesheets and their payslip to streamline the numerous steps usually involved in the payroll.
- An Australian and New Zealand accurate, configurable and comprehensive award interpreter that the business has confidence in.
- Great local Australian-based and knowledgeable system support.
That’s Inzenius All in one Compliant System.
That releases payroll from the mundane and repetitive activities of processing payroll, releasing time for the critical payroll analysis and audit function needed.
All-in-one system
Getting it Wrong Case Study
The following case, copied directly from the FWO website, highlights that, even with good intentions, getting the pay wrong can be disruptive and costly for the enterprise.
In this case, it seems to me to be a non-malicious actions that ended in the costs to the enterprise.
“Tasmania’s largest aged care operator, Southern Cross Care (Tasmania) Inc, is back-paying staff almost $6.9 million and has signed an Enforceable Undertaking (EU) with the Fair Work Ombudsman.
The not-for-profit organisation, which operates aged care facilities and offers home and community care services, self-reported its breaches to the Fair Work Ombudsman in August 2021 after identifying them during an internal review.
Southern Cross Care (Tasmania) conducted the review after identifying fundamental errors in its payroll and human resources systems.
The errors included failing to have agreements in place with part-time staff to work additional hours at ordinary rates of pay. This meant that employees were entitled to – but not paid for – overtime for these additional hours.
Southern Cross Care (Tasmania) also failed to recognise that shift-workers without written agreements were entitled to be paid from the start of their first shift to the end of their final shift each day, rather than just the hours worked during the separate shifts.
The underpaid employees performed work in locations across Tasmania including Hobart, Launceston, Somerset and Low Head. Underpayments occurred between 2015 and 2022.
Most underpaid employees were part-time aged care workers, nurses and community care workers who performed shift work, although full-time and casual employees were also affected. Some cleaners, laundry and maintenance staff were also underpaid.
Southern Cross Care (Tasmania) is back-paying 1,708 current and former employees a total of $6.87 million, including $5,806,756 in wages and entitlements, plus $313,591 in superannuation and $754,181 in interest.
Individual back-payments range from less than $1 to more than $220,000. Six workers were underpaid more than $100,000. The average back-payment is just over $4,000.
Southern Cross Care (Tasmania) has already back-paid the large majority of employees, including all it could find, and under the EU must back-pay all staff by the end of September.
Fair Work Ombudsman Anna Booth said an EU was appropriate as the employer had cooperated with the FWO’s investigation and demonstrated a strong commitment to rectifying underpayments.
“Under the Enforceable Undertaking, Southern Cross Care (Tasmania) has committed to implementing stringent measures to ensure all of its workers are paid correctly. These measures include commissioning, at its own cost, three annual independent audits to check its compliance with workplace laws,” Ms Booth said.
“This matter demonstrates how important it is for employers to place a high priority on their workplace obligations. Fundamental errors – including failing to ensure that written agreements with part-time employees were in place – were left unchecked, which led to long-term breaches and a substantial back-payment bill.
“We expect all employers to invest the time and resources to ensure they are meeting all lawful entitlements.”
The EU also requires Southern Cross Care (Tasmania) to provide FWO with evidence of systems and processes it has put in place to ensure future compliance; commission workplace relations training for human resources, payroll and rostering staff; write to all underpaid employees to notify them of the commencement of the EU; and display workplace notices detailing its contraventions.
Whilst overtime entitlements accounted for the majority of total underpayments, employees were also underpaid wages for ordinary hours, penalty rates for weekend and public holiday work, as well as paid meal breaks and shift penalties and allowances, including sleepover allowance.
The underpayments were under the Social, Community, Home Care and Disability Services Industry Award 2010 and applicable Enterprise Agreements”