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Employee underpayment epidemic altering workplaces

Maja Garaca Djurdjevic
Maja Garaca Djurdjevic
18 March 2020 2 minute readShare
Employee underpayment epidemic altering workplaces

The culture of payroll, human resources and finance departments has changed as a result of the recent employee underpayment scandals, with the subsequent fines, warnings and legal action by Fair Work.

More than one in three payroll managers (36 per cent) have admitted to altering the culture of their payroll, human resources and finance departments in the wake of the employee underpayment epidemic.

The survey of more than 1,100 payroll managers by the Australian Payroll Association revealed that 38 per cent of organisations have changed some compliance processes or systems in relation to their obligations to employee pay and entitlements.

While a further 17 per cent of payroll managers admitted that their organisation had committed to making changes, an alarming 46 per cent disclosed that their organisation has not made any changes, or committed to making changes, in 2020. 

Steps taken

Looking into what organisations are doing differently to avoid an underpayment scandal, one in five payroll managers (20 per cent) observed that senior management is checking reports and other documents from the payroll office.

Also, 17 per cent stated that their organisation has instructed employees to report any discrepancies in their payslips and entitlements immediately.

The research also found that only 13 per cent of organisations implementing changes have organised further training for payroll staff, while 10 per cent have outsourced to external payroll or HR experts.

“Again, it seems that payroll team training is being overlooked as an area of focus to combat employee underpayments — only 6 per cent of payroll departments reveal they will focus on training this year,” said Australian Payroll Association CEO Tracy Angwin.

Ms Angwin pointed out that the errors behind the scandals are often a result of inadequate training given to payroll managers, with the Australian Payroll Association’s 2019 Benchmarking Report revealing that the average payroll manager has just 2.6 days of training a year. 

“They are responsible for millions of dollars in payments and ensuring those payments meet the law. With employee payment legislation constantly changing, it is crucial for payroll managers to have the relevant qualifications and to keep updating their knowledge by attending training sessions regularly,” Ms Angwin said.

Asked which areas of employee pay and entitlements respondents are keeping a close eye on this year, only 15 per cent said their focus is on the “bundy clock” legislative changes to annualised salaries that came in place from 1 March. Eleven per cent said they will focus on payroll or award interpreting technology, and just 8 per cent will focus on overtime.

Fair Work audits net $1.3m

Last week, the Fair Work Ombudsman said a nationwide audit has recovered $1.3 million for underpaid employees in various sectors, from hospitality to manufacturing.

A total of 1,217 businesses were visited by inspectors from the Fair Work Ombudsman (FWO) since 2018 in industries including hospitality, domestic construction, retail, manufacturing and administration services.

According to the FWO, nearly half of the businesses audited (583) failed to get the workplace law basics right. Of these non-compliant businesses, 70 per cent underpaid their workers while 30 per cent failed their record-keeping and payslip obligations.

Employee underpayment epidemic altering workplaces
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Maja Garaca Djurdjevic
Maja Garaca Djurdjevic

Maja Garaca Djurdjevic is the editor of My Business. 

Maja has a decade-long career in journalism across finance, business and politics. Now a well-versed reporter in the SME and accounting arena, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies and enabling citizens to influence decision-making.

You can email Maja on [email protected] 

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