In a survey of Not for Profit (NFP) organisations conducted by HLB Mann Judd, 90% of respondents indicated that they were confident that their systems were up to date and that they were complying with all employee entitlements and related legislation (including awards). However, in the same survey, only 48% of respondents indicated that they had undertaken an independent audit of payroll compliance.
Interestingly, Yellow Canary often works with clients who put a lot of effort and time into ensuring their payroll inputs are compliant, but don't focus the same effort on checking the outputs. Even the most minor issue of non-compliance can result in hundreds of thousands - if not millions - of dollars in unpaid entitlements. Compliance in community and NFP organisations can easily be overlooked or considered only when an issue arises.
Red flags of non-compliance with the SCHADS Award
The introduction of the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 proposes unprecedented changes to reshape the industrial relations landscape and increase enforcement against wage theft. Evolving legislation is putting the onus on employers to do their compliance due diligence, yet the challenges surrounding industrial relations have become increasingly complex, especially in the Social and Community Services industry.
So many factors can contribute to non-compliance with an award. Everything from human error, lack of industrial relations knowledge and classification complexities all increase the risk that compliance issues will surface. Currently, the Social and Community Services industry is particularly vulnerable to non-compliance issues.
A growing workforce
The NDIS Workforce Plan estimates that more than 350,000 workers are expected to be working in the industry by 2024, a staggering 48% increase from this time six years ago. When a workforce is rapidly growing, previously used record-keeping systems, to track time and attendance for instance, are often no longer fit for purpose. Coupled with a lack of knowledge of employee entitlements, these can present challenges.
Manual timesheet systems
With the nature of work covered by the SCHADs Award, the majority of support workers will need to work at different locations to carry out their duties. Employers within this industry commonly rely on manually tracked timesheets. This means that data often has to be manually handled and calculated when inputted into payroll, opening the door to human error and compliance risks.
Award allowances
The SCHADS Award can be complex, with numerous clauses and conditions. The award proposes specific allowances when employees have a particularly skill, perform specific tasks, or even when they work in certain conditions. Employers may struggle to interpret and apply these conditions correctly if the awareness isn't there, leading to inadvertent breaches.
Tips for navigating compliance
Payroll compliance should be a habit, not an irregular task. Employers can have greater confidence that they are reaching payroll compliance by:
- Conducting regular audits with a third party as a safeguard;
- Continuously reviewing and optimising systems and processes to maintain compliance;
- Holding regular education sessions with employees and managers about employee entitlements; and
- Having a trusted legal advisor who can provide timely advice around changes to employment laws.
As the age-old saying goes, “you can’t check your own homework”. Ultimately, it does not matter how sophisticated an organisation’s payroll systems are; compliance can only be achieved when all of the above factors are working in harmony.
Automating proactive compliance
With the introduction of The Fair Work Legislation Amendment (Closing Loopholes) Bill 2023, directors and employers across Australia are now being urged to make a significant transition in their approach to wage compliance.
Evolving legislation is putting the onus on employers to do their compliance due diligence, yet the challenges surrounding industrial relations are incredibly complex, especially when it comes to navigating modern awards like the SCHADS Award.
Employers will need to exercise greater caution and devote more attention than ever before to ensure the compliance of their workforce.
Yellow Canary enables large Australian employers to streamline compliance across employee payments, entitlements and Long Service Leave.
Our Always On Compliance (AOC) platform automates monthly reviews, comparing what was paid, to what should have been paid, according to the employee’s modern award, enterprise agreement or industrial instrument.
The AOC platform generates variance and driver reports which enable our clients to rapidly address any issues, avoid protracted remediation projects, and demonstrate to stakeholders and regulators that payroll compliance issues are being addressed.
In a new era of workforce compliance, Yellow Canary is helping employers do right by their employees, whilst avoiding hefty penalties incurred by unintentional underpayments.
* Yellow Canary content on this website is intended solely for the purpose of offering commentary and general knowledge. The content is not intended to constitute legal advice. You should seek legal or other professional advice before acting or relying on any of the content.
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