IR laws impacting on the business payroll and its profitability 

It is fair to say that many employment conditions, whilst not in the spirit of the law, have been in practice and have not been compliant.

These actual payroll interpretation variations to the law were practised and facilitated by flexible employee agreements. The times have changed, which will profoundly impact the profitability of businesses.

Key to the changes include:

  1. The Better Off Overall Test (Boot) requires any employment agreement to not disadvantage employee pay and conditions compared to the stipulated award and same-job pay in the agreement.
  2. Pattern bargaining requires businesses to prove their superiority to other businesses in their markets to obtain lower conditions than their industry competitors.
  3. Regular casual employees can demand to be converted to full or part-time employees after 12 months of service.
  4. Employees are to have defined contracted days and times of work in their employment agreements that can only be varied by documented agreement.
  5. Contractor labour hire employees are recategorized as employees and/or awarded the same pay and conditions as the direct employees in the business, including the BOOT.
  6. Union rights to enter the business to inspect payroll records
  7. High enforceable undertakings to repay identified wage underpayments
  8. In extreme cases, financial and even criminal penalties for managers and directors of businesses knowingly underpaying their workers

Key to the impact of the changes include:

  1. Higher wages and penalty payments
  2. Less roster and time worked flexibility add to payroll costs
  3. Increased investigations of underpayments leading to back payments and penalties
  4. Potential for criminal charges for managers and directors of systemic wage underpayments

What needs to be done

  1. Test your employees’ contracted work schedule and pass the BOOT
  2. Review the business payroll records and processes to ensure timekeeping and other records compliance under the Fair Work requirements
  3. Ensure the payroll process includes steps for employee acceptance of changes to work days and times from their employment contract

How can businesses reduce the financial impact of penalties and BOOT

  1. Review the business employee structure to ensure each is in the appropriate award role
  2. Choose what award each employee should be BOOT tested under
  3. Undertake a review of the employee’s pay based on times worked as if paid under the award
  4. Restructure each position to be under the correct award and level
  5. Review what you are currently paying for each current role to ensure BOOT compliance
  6. Adjust pay for each employee to comply or move the position to be paid under the award