Workforce compliance

Why is payroll compliance so difficult in the retail industry?

Why is payroll compliance so difficult in the retail industry?
Georgia Simmonds
Georgia Simmonds
minute read
August 10, 2022

With over 1.2 million employees and as Australia’s second largest employing industry, the significance of the retail industry can’t be understated. In recent years, retail has also been a hotbed for highly publicised, large-scale underpayments.  Given its importance and the ongoing attention to compliance within the retail sector in particular, it’s fair to ask – what is it about the retail industry that makes compliance so darn hard? Here, we look at some of the common complexities that arise and what retailers should be looking out for when thinking about their compliance obligations.

1. The holy trinity of GRIA, SSW and Clerks

Many retail operations will be covered by not just one, but at least three different industrial instruments: the General Retail Industry Award 2020 (GRIA), the Storage Services and Wholesale Award 2020 (SSW) and the Clerks – Private Sector Award 2020 (Clerks).  This doesn’t take into account any unique enterprise agreements that may also be in operation at a particular business.  Essentially, this means that employers must make sure they are complying with the various different instruments that all come with different entitlements. A common trap we see employers fall into is employees moving between roles (e.g. from a store support role to a retail role), but without updating that employee’s instrument coverage in their payroll systems to support this change to ensure the correct payments and entitlements are made.

2. Roster cycles

In our experience, the GRIA is one of the most complex Awards when it comes to rostering arrangements for full time and part time staff.  There are multiple rules relating to consecutive days off, maximum days in a week, and regular Sunday work that need to be considered when rostering employees. In many respects these rules overlap or, in practice, deal with the same scenarios.  Employers are often scratching their heads when it comes to implementing these rules,  including in the order in which the rules should be applied.  Adding to the complexity, a number of the rules are applied across two-week roster cycles, while others operate across four weeks.  Many payroll systems simply are not configured and equipped to calculate entitlements that arise outside of their built-in payroll cycle or to operate on a rolling basis.   Without a system in place to do regular compliance checks, it is our experience that these entitlements are often inadvertently overlooked and not calculated at all, leading to significant underpayment issues.

3. So, what do I owe for a breach of roster rules?

Even once you’ve determined how the various rostering rules interact, the GRIA is often silent about the consequences for breaching a roster principle.  Many employers form the view that overtime is payable in these circumstances, but how this applies in practice, when overtime is payable, and exactly how much can get complicated. Trying to figure out an accurate amount is not always an easy process (and we haven’t even mentioned the knock on impact to superannuation yet!)

4. Record-keeping

Unfortunately, what we often see is some GRIA rules and entitlements applied in a relatively ad-hoc way without a lot of accessible or accurate records kept to note what has actually happened.  This is particularly the case for entitlements like time-off-in-lieu (TOIL) and higher duties, which may be applied and implemented very differently by individual managers or leaders on the ground. This makes it very challenging to accurately ‘recreate’ what has happened for the purpose of ensuring employees were paid their entitlements correctly.

5. Payroll and time and attendance

Payroll and time and attendance systems are not always friends, and might not capture all the data points  In our experience, and in a similar vein to the above, the systems in place often do not cater for the various situations that might arise. For example:

  • The GRIA says that a meal allowance is owed if 24 hours’ notice of overtime is not given. However, most payroll or time and attendance systems aren’t built to capture and record whether or not notice was given, which makes it difficult to then know whether the allowance was paid correctly, or at all.  
  • Larger retailers with multiple stores may require employees work two shifts in a day. They might also require employees to perform stocktake, ask them to come back in (recall), or perhaps an employee just didn’t clock in / out with a break and it was recorded as two shifts.  Without manual intervention, many time and attendance systems will not easily deal with these scenarios, which can often result in payment errors.  

How to optimise retail workforce compliance?

Given all the difficulties that can potentially arise when seeking to comply with payroll obligations in the retail industry (only some of which we have touched on above), it’s critical that employers have put measures in place to ensure regularly checking that their internal systems and processes are catering for all the different scenarios and nuances that might arise.

Failure to do so can, and often does, result in underpayments which over time and with large workforces, can very quickly compound to become a hugely significant wages bill.

The Yellow Canary platform is built to undertake regular monitoring of a businesses payroll, in line with the relevant Modern Award (such as the GRIA) and any unique enterprise agreements, to ensure wages and salaries, superannuation, and all entitlements are paid correctly.

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