Finance

A whopping 90% of payroll managers find laws confusing and contradictory, new study shows

Priscilla Pho /

payroll managers confused

Australian Payroll Association founder and chief executive officer Tracy Angwin. Source: supplied.

As the Morrison government looks to criminalise wage theft, 90% of organisations say their payroll managers find the current laws confusing and contradictory, reveals new Australian Payroll Association (APA) research.

Released yesterday, a survey of 520 payroll managers found 89% were also unsure how to apply laws to real-world situations because they were unsure of how to interpret the wording of the awards and legislations.

APA chief executive Tracy Angwin tells SmartCompany this isn’t a surprising problem considering the number of contradictory regulations and the lack of qualified payroll professionals in small and large businesses alike.

“I think it’s really easy to say that the laws just have to change. I think that the laws work well with people who are qualified to do the job,” she says.

“Fifty per cent of the clients we audit have overpayments, too.

“Yes, it’s complicated but many, many employers do it just fine.”

This study comes on the back of a string of underpayment stings from the Fair Work Ombudsman (FWO). Sunglass Hut’s recently admitted to underpaying part-time employees due to confusion about overtime. Bunnings last Thursday claimed a payroll error was to blame for incorrectly contributing to current and former part-time employees’ superannuations funds.

Wesfarmers’ industrial division yesterday revealed they underpaid up to 6,000 current and former employees $15 million due to a reportedly inadvertent error picked up during their upgrade to the single touch payroll system.

The FWO’s responded to Wesfarmers’ claims by reiterating business’ responsibility to check their own compliance with workplace laws.

“Each week, another large company is publicly admitting that they failed to ensure staff are receiving their lawful entitlements,” it said in the statement.

“This simply is not good enough. Companies will be held accountable for breaching workplace laws.

“Companies and their Boards are on notice that we will consider the full range of enforcement options available under the Fair Work Act, including litigation where appropriate.”

A need for qualified payroll professionals

Most payroll staffed are under-qualified, Angwin says.

In a separate report released last year, the APA found only 10.1% of payroll professionals across small and large organisations have a competency-based payroll qualification.

“Every single one of these underpayment cases we’ve looked at — none of them have payroll staff with qualifications,” she says.

As a result, the survey shows that to understand workplace laws to the level of compliance, the majority of payroll professionals require outside assistance.

Of the payroll managers who confess to being confused, 58% admit they resort to consulting other payroll, HR or legal experts to clarify legislations for compliance. A further 18% of businesses said they contact the relevant government body for clarification.

Small businesses, in particular, seem to feel they have fewer resources to help with these issues.

“This is where small businesses are often disadvantaged, because if I was a large business, I’d probably have a team of lawyers … that can either figure this stuff out or get me out of trouble,” Angwin says.

While 70% of larger organisations prefer to seek experts privately, only 58% of SMEs with 51-200 employees take this route. This number dips to 41% for businesses with fewer than 50 employees.

According to the data, as the number of people a business employs increases, so does the likelihood they will work out solutions to payroll problems independently.

For businesses with 300 employees or fewer, Angwin recommends using up-to-date tech and compliant software to minimise confusion.

“Any business that can’t really justify a full-time, qualified payroll manager should probably put their payroll in the hands of a managed payroll service that has the right technology and staff.”

Confusing regulations

On the other hand, Angwin also acknowledges the confusing nature of regulations, which can further add to the burden of unqualified payroll staff.

“It’s not that the law is fine — it is confusing. There are right and wrong answers generally. There are a few things that are absolutely contradictory,” she says.

Angwin also says regulating bodies are often less helpful than businesses expect them to be. An example she gives is the confusion over the changes to sick leave law.

“Even if you call Fair Work… they will say, ‘no, you need to get legal advice’. So they can’t even give you advice on their own regulation.”

However, Angwin says these contradictions are the exceptions, and are hardly ever the cause for non-compliant companies making headlines with underpaying employees.

“The things that we read about employers getting wrong in the paper are not to do with sick leave generally. They’re to do with things like an inability to identify ongoing errors with the calculation of pay,” she says.

“The calculation of pay is actually pretty black and white.”

Angwin warns employers these errors are often the result of “set and forget” mentalities and over-reliance on outdated programs.

“Fit-for-purpose technology, good processes and trained staff — that’s all you need to run a compliant payroll function.”

NOW READ: Jail time for wage theft: Government moves ahead with plans to criminalise worker exploitation

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Priscilla Pho

Priscilla is a reporter at SmartCompany. You can contact her at [email protected].

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