The Critical Importance of Auditing Your Payroll Processes

By Michalle Faulkner – Managing Director
EastCoast Human Resource Group

Rather than share my top tips for managing team member behaviour and risk during the festive season – which would have been an easy segway for this month due to the timing of the article but rather, I thought I would talk about the critical importance of auditing your payroll processes and ensuring that you are remunerating your employees aligned to the obligations of the respective awards or agreements that pertain to your business.

Woolworths recently made international headlines after it was found that they had underpaid nearly 6,000 employees!  That is costly in itself but when you consider the underpayments went back nine years, they are expecting the wage repayments to affected employees could be up to $300 million.

While I know we may not have many businesses the size of Woolworths in our SHINE Business Women’s Network, if the likes of these massive corporations such as Super Retail Group, Bunnings, Qantas and Wesfarmers and even public celebrity identities such as George Calombaris and Neil Perry can’t get it right, how do the small to medium businesses ensure they minimise the risk of not only failing to meet their legislative obligations but also the extremely negative media exposure that something like a large underpayments case can bring to a brand.

Whilst awards are complicated, its imperative to ensure that you or your payroll team have the following key elements correct: –

• Have an in-depth understanding of the industrial instrument that applies to your business, and if it’s an Enterprise Agreement, ensure that your software system and or your payroll team are interpreting that correctly;
• Classify your team members correctly based on the tasks that they are undertaking and align it with the classifications of the specific level under the instrument;
• Know what penalties, overtime and or shift allowances under that instrument apply to your staff and ensure that these are applied where required to comply;
• Should you make changes to your roster or shifts, always review if this impacts what penalties, overtime or allowances might be applicable;
• If you are remunerating your team under a salary arrangement, ensure that there is no disadvantage to the employee when compared against the award entitlements (ensure you accurately calculate all overtime, penalties and shift allowances based on the actual hours and days that you require the staff member to actually work);
• Where you employ Junior employees, be mindful of incremental increases either for birthdays and or when they increase tasks or responsibilities or undertake any training or qualification that could see them move to another classification;
• Ensure you apply all federal minimum wage increases where required.

In addition to the above elements, errors can still occur so you may consider (based on the size and complexity of your payroll obligations) to utilise trusted advisors to conduct independent audits of your system on a regular basis.
The Fair Work Ombudsman has many free tools at your disposal such as the THE PACT (Pay and Conditions Tool) which allows you to enter information on calculating pay rates including allowances and penalty rates, a Shift Calculator  which will show you the different pay rates for shifts and even a Leave Calendar and Notice and Redundancy Calendar.
Don’t be caught out, seek guidance where you need to ensure that you are paying all of your team correctly and negate any risk of exposure to underpayments.

Have a great rest of 2019, looking forward to an amazing 2020 and all the best for the upcoming festive season.