There seems to be another organisation every other month that has made massive payroll errors by underpaying staff. You would assume that with the amount of staff and possibly HR consultants working on a large payroll such as Woolworths or Dan Murphy’s, that the pays would be perfect!
So how does a $300 million underpayment happen? Woolworths has admitted that it failed to update their agreements alongside general modern award and minimum pay increases. Fair Work dictates that NO staff can be paid less than a Modern award even if an enterprise agreement has been put in place.
A few restaurant chains have recently been picked up with staff underpayments, such as Subway and George Calombaris. These errors are more in line with small business and include under paying of weekend loading’s, superannuation and allowances such as shift allowances.
Yes, the Australian payroll system is complex and to tell the truth my least favourite part of accounting as it is so time consuming and stressful. Payroll and superannuation are some of the most common errors that we see here at WiseClick, to help de-mystify payroll I have listed some useful steps below that you can work through to ensure that you are paying your staff their correct entitlements.
STEPS TO TAKE TO ENSURE YOUR PAYROLL IS CORRECT
- Find your award – Ascertain the correct award for your business. Fair Work 3-step help
- Pay Items – Check that you are paying all of the entitlements listed on your award
- Pay Rates – Use the Fair Work pay calculator to ensure that your salaried staff “rolled up wage” includes the same benefits that your casual and part time staff enjoy, such as weekend loadings.
- Superannuation – Super is calculated on all staff “Ordinary Time Earnings (OTE)”, the meaning of OTE has broadened over the years so you may be underpaying. Check your software is accruing on the correct pay items
- Employment Contracts – Your staff need to know where they stand, many that I talk to don’t even know if they are casual or part time which can be a massive difference in pay rate. Once you have a template setup it can then be re-used for many years
- Software – Pay for a good payroll software which will help you with correct tax and super, reduce the time spend running pays so that you can focus on your pay rates and setup (we use MYOB, Xero or QBO)
- Payslips – These are essential to provide as an employer. It is a legal requirement and hefty fines can be applied if and when you are audited if you are not providing these to your employees or are not including all the required information.
- Check your pay rates every year in line with the minimum wage increase on the 1st July
- Use this link for a full step by step list of things to check payroll for small business
If you are still in doubt, then contact Fairwork and ask them (anonymously if you like) to check your pay rates and go over your award category and understanding.
As a side note, when looking up the Fair Work site be aware that other employment advice companies’ websites appear and look very similar, they like to pretend to be Fairwork. Please do not use them as they are far too expensive and you can get much better help for your dollar. Ensure you click on a legitimate link as per https://www.fairwork.gov.au/
A GREAT PRACTICE TASK FOR OUR STUDENTS – Use the links and information above to check your own pay and award. Under Fair Work legislation you should always be able to work your pays out with the payslip information provided.
I look forward to seeing you next week for our final ICB Networking Event of the year 🙂
Cheryl
