Leveraging technology to stay ahead of rising payroll compliance penalties

In January, the Fair Work Legislation Amendment introduced new wage laws in Australia, which will have far-reaching implications for finance and HR departments across all businesses. 

Previously, intentional underpayment of wages, or 'wage theft,' was classified as a civil liability offence. It is a criminal liability offence, meaning businesses that deliberately underpay their employees can be subject to much stricter penalties, including fines and imprisonment. Both individuals and companies can be potentially liable for underpayments.

This amended legislation underscores the importance of accurate and lawful payroll processing for Australian businesses. It has widespread implications at both a management and compliance level. Not only can payroll managers be held personally accountable for deliberate underpayments, but organisations face enhanced compliance obligations regarding how they audit, manage, and distribute payments. 

There have been several high-profile incidents of wage theft in Australia over the past five years across industries such as hospitality, higher education, and retail. In some cases, these scandals have led to the irreversible collapse of the business in question. This string of headline-grabbing instances prompted the recent criminalisation of wage theft, and payroll teams nationwide now face increased scrutiny.

According to a recent global report from Remote, 40% of surveyed employees had experienced a payroll error in the past year alone. Therefore, the implications of such large-scale errors for those managing payroll in Australia became much more serious.

Payroll management is no longer just a behind-the-scenes task. Regardless of size, it's now crucial to a company's operational integrity. What may have once been dismissed as a simple administrative mistake can now result in hefty penalties and serious reputational harm.

Using the correct technology in a business can significantly contribute to new compliance obligations in payroll. With the increased need for rigorous adherence to payroll regulations, more frequent audits and a software platform that can automate updates to changing compliance requirements without manual intervention are required.

Leverage consolidated, single-truth software for payroll compliance.

From running payroll to automating expense management and generating reports, any finance arm of an organisation still in the manual realm will likely miss out on opportunities to work more effectively.

In the context of the maturing payroll compliance landscape in Australia, manual processing is no longer suitable as businesses try to keep pace with the updated regulations. This is especially pertinent if you work in an industry with employees in multiple locations globally. Staying compliant with local payroll laws in different countries can be challenging. 

Sophisticated payroll software has built-in mechanisms to automatically reflect changes to the regulatory landscape of the country in which it operates. Moreover, operating in multiple countries often results in various third-party software handling payroll in the home office and abroad. The right payroll software can and should be consolidated into a single source of truth. 

Tips for mitigating risks associated with new payroll compliance requirements

• Payroll managers should conduct regular audits of their payroll processes. A systematic review of payroll processes throughout the organisation will help identify and resolve discrepancies.
   
• Utilising advanced payroll software regularly updated to reflect local legislative changes can significantly reduce the likelihood of errors. A payroll system with automated updates for global regulations built-in is now a necessity, not only to stay compliant but also to streamline overall operational efficiency.
   
• Integrating payroll systems with other organisational and administrative undertakings, such as recruitment and onboarding, can help maintain visibility over the entire employee lifecycle as they begin with, work for, and eventually exit the company in a fully compliant manner.
   
• Adherence to one type of compliance can usually beget compliance with other kinds. For example, embracing technology to handle payroll compliance has knock-on benefits, such as strengthened employee data security and automated backup systems, which contribute to the overall compliance health of an organisation in Australia.

By leveraging the right kind of payroll technology, payroll, HR managers, and accounting teams can help safeguard their organisations and themselves against the new wage theft laws.