You’ve probably heard the old adage that “nothing in life is certain but death and taxes.
A timely and accurate payroll process is one of the most critical functions of any organisation, but achieving consistently on-time and error-free payroll is no easy feat for Australian businesses. A variety of payroll challenges confront the enterprise market, and too often businesses have been slow to address them — to the extent that Australia’s top employers make payroll errors exceeding $4.4 million each year, and have incurred over $250 million in the past decade in litigation costs for unpaid wages.
Below, we address some of the most pressing payroll challenges facing Australian businesses in 2018:
New demands in the digital age
With the advent of smart devices, social media, and cloud computing, people have come to expect access to information anytime, anywhere — including their payroll data. Payslips sent to mobile devices, real-time comp reporting, and GPS and time and attendance functionalities are becoming increasingly common in modern payroll processes.
However, with new and advanced technology comes greater responsibility, particularly relating to evolving data privacy and protection regulations. PwC Australia reports that “very few organisations” in Australia have transitioned to “true cloud based payroll platforms,” which means that often an organisation’s payroll system won’t be directly integrated with their HR and Finance systems (which drive payroll inputs and manage outputs). This increases the risk that employee payroll data be accidentally sent via email, or some other non-secure data exchange. Thus, employers with non-cloud-based platforms need to reevaluate their current payroll solutions in order to keep up in the digital age, and ensure the accessibility, flexibility, and — most importantly — security of their payroll data.
Complexity with varying EAs
Enterprise Agreements (or EAs) are legally-binding agreements negotiated between employers, employees, and labor unions acting on behalf of employees. They include stipulations for minimum wage, working conditions, time and attendance, overtime, penalty rates, allowances, and various other facets specific to a particular role. Businesses often have to adhere to multiple differing EAs within their diverse workforces. Because of this, its imperative that Australian employers utilize payroll solutions that are both flexible enough to accommodate this diversity, and also agile enough to incorporate these accommodations in what is usually a short time frame.
Global payroll challenges
PwC Australia reports that 89% of large employers “expect international mobility to increase, but much of this increase will be through short term assignments and international business travellers, rather than traditional long term assignments.” In short, businesses should anticipate managing an increasing variety of payroll obligations for multiple locations — which can be a tall order for global organisations with different employee types around the world.
Changing workforce demographics and flexible working arrangements mean that businesses are already managing a range of employee types on payroll, from employees on casual contracts, contractors, part-time workers, full-time staff, and employees with job sharing arrangements. Now, with international mobility on the rise, the need to accommodate local labour laws for a diverse variety of locations adds an additional layer of complexity to the payroll process. Too often, businesses function at about 80% compliance globally, and in doing so expose themselves to considerable risk of governmental penalty or litigation.
Single Touch Payroll onset
Beginning 1 July 2018, the ATO will require employers with 20 or more employees to employ a payroll solution with Single Touch Payroll reporting capabilities. With a Single Touch Payroll-enabled solution, employers will be reporting payments such as employee salaries and wages, allowances, deductions (like workplace giving) and other payments, pay as you go withholding, and super information directly to the ATO whenever they pay their employees. This streamlines reporting of tax and super information for each employee to the ATO.
After the first 12 months of this new law’s implementation, enterprise employers will be subject to administrative penalties and fines should they fail to report on time. Because of this, it’s more critical than ever for Australian organisations to streamline their payroll processes and ensure that employees are being paid on time, or otherwise risk fines from the government.