Payroll expert and small business decry employment complexity

By: Rob McKay


Call to simplify legislation and awards as companies big and small struggle to comply

Payroll expert and small business decry employment complexity
Tracy Angwin

 

The Council of Small Business Organisations Australia (COSBOA) is demanding employment law reform as the workplace system now proves too complicated even for large, well-resourced companies and organisations to comply with.

Peak body COSBOA points to commentry from its CEO, Peter Strong, in the Australian Financial Review noting that the likes of Wesfarmers, Bunnings and the ABC "can’t get it right and have to pay millions of dollars to employees who have been underpaid".

"To hear the Fair Work Ombudsman now aggressively target businesses who self-regulate and admit to underpayment and undertake remedial action is concerning," Strong states.

"The fact that the system is so complicated that even large expert teams cannot get it right is not a reason for the regulator to target directors and boards who have acted constructively and honestly but is a reason to demand the system be simplified."

This latest intervention comes as lawyer and Sewell & Kettle principal Ben Sewell calls for insight and understanding to be prominent in any push for a broad-brush criminalisation of ‘wage theft’, especially as it affects small to medium enterprises (SMEs). 


 

Read Sewell on the threat of criminalising small business workplace errors, here


COSBOA backs industrial relations minister Christian Porter approach of systematically updating the workplace relations system to "make it work for both workers and employers, particularly small business employers", it says.

"Porter recently stated that the government will, step by step, identify and resolve the problems that currently exist by engaging with the business community and with unions.

"We in the world of small business just want the system to be less complicated and easy to understand for us and our employees. We should all want compliance to be easy."

"The winners from a simplified system will be everyone except for those who deliberately rort the system.

"The rorters will find it more difficult to trick employees and more difficult to dodge the regulator."

It argues that the regulator "should be praising those businesses who self-diagnose and then constructively fix the mistake and compensate those affected.

"The FWO can then spend more time targeting those who are deliberate in their underpayments."

Major survey

The Australian Payroll Association (APA) sees many of these issues having particular impacts on trucking and logistics, given the preponderance of SMEs and smaller family operations within it.

APA CEO Tracy Angwin says she fails to understand how such transport industry players can stay on top of the changes and be compliant given the amount of shift work and overtime occurs in what is often  a 24/7 business environment.

"You’ve got a really difficult industry," Angwin says, noting changes can be both in the rate and in how it is calculated.

"It’s a full-time job understanding payroll, let alone running your transport business.

Noting she receives at least three Australian Taxation Office (ATO) notices a week advising her of pay-rate changes, Angwin advises companies employing fewer than 400 employees to outsource their payroll administrative burden to a reputable service provider.

This, to cover compliance as well as transactional services.

Angwin warns that March will see a new legal requirement for a regular reconciliation on annualised salaries.

The APA recently revealed the results of an employee entitlements and payments survey of 520 payroll managers from a range of sizes and industries.

It finds that 90 per cent have view legislation or awards as confusing or contradictory, forcing nearly 58 per cent of them to seek advice from payroll, human resources or legal experts.

Just shy of 90 percent of those surveyed find certain clauses poorly thought out and 93 per cent believe revision or simplification is needed on certain awards.

"Government legislation and employee awards are constantly changing, and often they can be confusing and difficult to understand," Angwin says.

"It is concerning that payroll managers – those who are involved in handling our pay, superannuation and leave entitlements – find the laws governing these things confusing and at times contradictory.

"A common example many find confusing is whether superannuation is payable on leave loading.

"This is so ambiguous that the ATO [Australian Taxation Office] attempted to clarify their position on it in March this year, and advised that in recognition of it being confusing and not a straight-forward answer, it likely wouldn’t apply ‘Part 7 Penalties’ for non-compliance in the past.

"Together with my own experience in interpreting employee legislation, I believe it is important to re-examine and review some parts of the legislation to ensure that they can be understood and executed in the real world without ambiguity."

According to the ATO, if employers lodge their super guarantee charge (SGC) statements "late, or fail to provide a statement or information when we ask for it during an audit, you are liable for a penalty (Part 7 penalty). The maximum penalty is 200% of the amount of the charge payable".

For SMEs, APA’s survey finds payroll managers in small businesses are calling the tax office or Fair Work for clarification more than large businesses.

"One in four (25 per cent) of payroll mangers in businesses with up to 50 employees seek advice from the relevant government body, compared with just 6 per cent of those in large businesses (more than 1,000 employees)," it states.

 

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