Many people, and businesses, view the payroll as that tedious function that is under the control of HR or the accounts team. However, getting it wrong holds risks to a company’s reputation, security or key IP loss.
It seems strange that a function which is so vital to paying staff is often overlooked by businesses until later down the track. Businesses often don’t give the payroll system it requires to run efficiently.
A well-functioning payroll ensures everyone is paid correctly (which boosts team morale); messing it up can have severe consequences.
You may have seen a lot of information regarding businesses underpaying employees recently. It is understandable that this issue has received a lot of attention, as a working payroll is vital to a business’s ongoing success.
Some businesses deliberately choose to underpay staff, which is criminal, though many do so out of forgetting to update their software and are therefore paying staff the older rates.
Did you know that the minimum wage increased in Australia this year? Furthermore, is your software aware of this change? Additionally, businesses who have over 20 staff are now required to pay their employees with an STP-enabled solution.
Businesses often get away with non-compliance, however the ATO will soon run out of patience and start raining down on these pay-dodging enterprises.
Ensure your business software has a solution that automatically updates in line with compliance changes.
Privacy is one of the most integral elements to a workplace’s payroll system. There are certain practices that need to be in place to ensure the personal information of staff is secure.
- Having a policy and practice on how staff information should be collected and stored.
- Ensuring that staff are aware of the policies and practices in place. Furthermore, staff need to have the policy made available for their comprehension.
- Only collecting and retaining information that is necessary to the payroll system.
- Holding updated complete and updated information.
- Ensuring that the business has complied with privacy obligations.
3. Record Keeping
If you employ staff under a modern agreement or award, you are legally required to keep accurate and complete wage and time records. You must also issue pay slips to each employee. Furthermore, you must keep each employee’s time and wage records for a minimum of seven years and ensure they are always open for inspections. They must be written in plain English and easy to comprehend.
An employee must also be granted a copy of their records should they request one.
You may not be aware of this, and may not want to hear it, but much fraud is often committed through the HR department.
According to a 2014 report from consultancy giants PWC, HR account for up to 13 per cent of all fraudulent activity suffered by Australian companies over a one year period.
Therefore, it is imperative that your business has solid practice in place to avoid fraudulent activity.
Are you tired of worrying about your payroll system? Does the sound of the aforementioned payroll risks give you the heebie-jeebies? If so, get in contact with the professional bookkeepers at Direct Management. We can ensure your payroll is safe and working efficiently.