Why is it so hard to pay people correctly?

24 August, 2016 Tasmin Trezise

Most people never have to worry about the payroll compliance process required to get someone paid. It’s not a hugely riveting subject; I mean, staff go to work, they work, they get paid.

However, as Fair Work’s list of big companies failing to pay legal wages continues to grow, society is starting to wonder why is it so hard to pay people correctly?

For the past three years we have made it our business to know the intricacies of payroll, and how to build software which automates the complexities of getting people paid. Currently calculating over $500 million in casual and part-time wages each year, we’re an advocate for those who have the best intention and efforts to pay their staff correctly.

With each new wage rate transgression I’m reminded of an old industry saying, “a good payroll officer is somebody nobody knows.” An understanding that attention is only paid to your payroll when there are errors, under-payments or the pay is late.

What most don’t realise is that behind a simple payslip are legal questions covered with grey and varying shadows of complexity. Australia is routinely identified as one of the most complex countries to run payroll in, with workforce administration, payroll compliance requirements and regulations identified as the major complicating factors.

Far from magic, the time and expertise required to calculate some pay could convince any seasoned mathematician to hang up their wand. In total, Australia has 122 Modern Awards with an average Award having between 180-200 individual rules. These rules specify pay rates for overtime hours during the week and weekend, overtime for RDO, public holidays, late night shifts and employee classification, just to name a few.

For big brands and large groups, these calculations are often decentralised, leaving the responsibility to those at ground level without the necessary incentive or knowledge for strict adherence. Broadly, for those who had identified systemic issues, they simply didn’t know how to begin to resolve them.

Read a Modern Award document cover to cover, and you’ll empathise with small business owners and executives who might simply not understand the problem, let alone how to guarantee organisational wide compliance.

So yes, payroll compliance is hard, complex and costly, but does this excuse paying below minimum entitled wages? Unfortunately not. Complexity is no excuse for non-compliance.

It’s the responsibility of businesses, of all sizes, to properly comply with the law. Rather than being loose with interpretations, the answer is to invest in solutions that incentivise and reward compliance management whilst reducing the regulatory burden.

Fair Work are unlikely to slow in their mission to bring uncompliant businesses to light, so it’s time for businesses to get smarter about how they manage their workforce and compliance responsibilities.

Being smarter and more innovative is the only way to control labour spend in the productive, high-wage workplaces of the future. It’s time to use wage compliance management as a competitive edge.

Our company is passionate about building solutions to help good businesses be more efficient while lifting those struggling under the weight of Australian workplace laws. The solution to this problem, if it wants to be solved, is technology.

Sign up for a trial of Tanda Enterprise Edition to significantly improve your wage compliance oversight and labour profitability.

Tasmin Trezise is a founder of workforce management software, Tanda, which helps businesses get the most from their workforce.

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