Working closely with middle market businesses means we regularly see a number of challenges playing out in payroll processes.
1. Confusion around interpretation of Enterprise Bargaining Agreements and Industry Awards, in a complex industrial relations system
Award and EBA arrangements can be highly complex and constantly changing making it difficult for businesses’ payroll departments to be across every detail of the arrangement without expert legal advice. Most businesses try to do the right thing in paying their people the correct amounts, but have inadvertently interpreted an Award arrangement incorrectly or misclassified an employee under the arrangement, leading to errors in payroll payments
2. Keeping on top of increasingly complex employment tax laws and reporting
As employment tax laws and reporting change and become more complex, it can be hard for busy businesses to stay on top of changes and remain compliant. A current example is Single Touch Payroll reporting to the ATO which will apply to the majority of employers from 1 July 2019, giving the ATO ‘real time’ access to your businesses’ payroll information including salaries and wages, pay as you go (PAYG) withholding and super payments. Any mistakes that are made will be picked up in ‘real time’ by the ATO, and potentially shared with other bodies such as the Fair Work Ombudsman and the various State and Territory Revenue authorities. A single error in future can be far-reaching, and may have a greater impact on the business and business owner than in the past.
3. Struggling to set up payroll systems that can deal with complex Award, entitlement and employment law requirements
Payroll systems need to be constantly maintained and updated to meet ever changing requirements. When payroll systems are set up incorrectly at the outset to deal with the complexities of employment arrangements, both over and/or underpayments to staff can occur over time.
It is also common for businesses to incorrectly integrate payroll and time recording systems in relation to complex overtime and other penalty entitlements.
4. Weaknesses in payroll control environment and inadequate oversight of payroll obligations and processes by management and the Board
Poor oversight and lack of focus on the importance of the payroll function in your business can perpetuate many of the problems outlined above and can lead to fraudulent payments being made and/or systemic payment issues to staff. In light of the current regulatory crackdown, this could pose serious issues for businesses.
If your business has Awards/Enterprise Bargaining Agreements or you are not confident that your business is on top of its employment obligations there are strategies you can implement, and support you can access right now, to get on top of the challenges of payroll, save money, protect the image of your business and protect you as a Director or business owner from personal liability and potential criminal conviction.
Read: Payroll solutions for middle market businesses.
To discuss your payroll challenges contact your Pitcher Partners expert.