Directors confront the potential of heightened liabilities as the federal government deliberates on potential new legislation aimed at criminalising wage theft, with intentions to introduce such measures later this year, in 2023.

Wage theft encompasses the actions of employers who fail to provide employees with their rightful wages or entitlements for the work rendered. This may involve withholding wages or denying entitlements such as overtime pay, penalties, superannuation, and allowances.

A prevalent risk to businesses emerges from unintentional underpayment of employees, often stemming from inadequate payroll controls within a company, particularly when operating in industries governed by intricate award structures and not implementing a proper payroll software to help solve this issue.

Underpayment of wages has garnered attention as an alarming issue, often being referred to as an epidemic in news coverage. The concern has grown significantly for both large and small businesses since it gained public and corporate awareness in 2015 due to the 7-Eleven underpayment scandal. Subsequently, the company disbursed $320 million to workers and franchisees and invested in enhancing their systems.

Numerous organisations, including prominent Australian brands such as CBA, Woolworths, Coles, and Melbourne University, have come under scrutiny for their wage practices. Many have taken the initiative to disclose instances of underpayment, initiating costly rectification procedures.

Submissions on the government’s consultation paper, titled "Compliance and enforcement: Criminalising wage theft," concluded in May. This paper explores potential penalties, with suggested fines of up to $825,000 for individuals and a maximum of $4.125 million for corporations. The consultation also contemplates expanding the current criminal liability for directors in cases where a company commits an offense, introducing a novel "failure to prevent" offense while they think they have implemented the right payroll software technology to help improve their compliance.

Industry groups are intensifying their objections to the proposed outcomes.

It is crucial to note that the overwhelming majority of underpayment issues arise not from deliberate theft or fraudulent conduct, but from errors, often due to the complexity of the regulatory framework, rendering compliance exceptionally challenging.

The findings of APA’s April survey of 2178 payroll professionals suggest corporate Australia is facing higher risks in payment errors due to the high-pressure working environment inside the pay office. Many payroll staff point to lack of leadership and resources within companies, with more than 41 per cent of payroll staff in large companies (500-plus employees) reporting they are burnt out. Just over 31 per cent plan to leave their jobs in the next 12 months.

At least part of the solution for organisations lies in providing greater support and investing in the payroll function, insists Angwin. A semi-government organisation she recently encountered had 76 people inputting payroll data in various departments, but not one of them was qualified.

KPMG uses a technology for continuous monitoring of clients’ obligations and risk factors and provides mathematical proof of issues and metrics for directors’ dashboards.

However, technology needs to be tailored to the organisation by people who know what they’re looking at from a data and obligations perspective.

Another crucial point is that general audits are unlikely to show discrepancies in payroll — it must be a payroll compliance audit by those who know what they are looking for. Many see prospective new legislation on wage theft as a salve to a declining trade union movement. Others believe it will be effective as a deterrent to encourage increased compliance.

The SCHADS industry is one of the most confusing and convoluted modern awards in payroll. Having helped dozens of businesses in the homecare and aged care sector, we noticed a common pattern across all of them.

These are the six most missed SCHADS award conditions that you should know about. We have shortened it for you, those are:

• Conversion to Full – Time or Part – Time Employment
• Varying rest breaks between shifts
• Penalty rates for working outside normal hours
• Higher duties for Home Care employees
• Different minimum hours for different types of employees
• Roster change rules apply

Ensuring adherence to federal, state, and government regulations is paramount when it comes to managing payroll and compensating employees. To maintain payroll compliance in Australia, it's imperative to gather precise information from all members of your personnel and teams.

Businesses also have the option to delegate their payroll tasks and compliance responsibilities to external experts, which can lead to time and cost savings. Alternatively, another avenue is to incorporate automation into the process. Utilising dependable payroll software can not only streamline HR operations but also introduce automated compliance protocols, replacing the need for manual procedures and documentation management.

Employment Hero offers a comprehensive all-in-one solution, encompassing a spectrum of features. This includes managing personnel information, payroll, regulatory compliance, and leave administration. Additionally, the solution empowers you with full authority over data security. Furthermore, the availability of analytical reports equips you with valuable insights for informed decision-making.

The platform simplifies the process of averting inadvertent mistakes. While engaging with the system, it's essential to acquaint yourself with the payroll compliance checklist specific to Australia. Once integrated into the system, the process only necessitates your authorisation to execute.

Finally, you don’t have to manually adjust processes to the latest rules, awards and regulations. But some of the key benefits that streamlining payroll processes are summarised as follow: