The complexity with Payroll starts with Fair Work and that's just the tip of the iceberg.
Updated: Mar 18
Processing payroll is about responsibility, starting with the Employer. This responsibility for anybody managing payroll in Australia is enormous. We have an extremely complex Industrial, Superannuation, and Taxation system that is ever-changing and evolving.
Over the last 30 years, payroll has become considerably more involved with very little thought given to the consequences of change. The exponential growth of regulatory obligations has been on a logarithmic scale rather than linear.
What is the responsibility of the Digital Service Provider?
The responsibility as a Digital Service Provider (DSP) is to provide the tools to assist in ensuring that employers can pay their employees correctly. Fundamentally this is our role as people tasked with developing payroll solutions. It is fair and reasonable to state that no DSP has interpreted every aspect of payroll correctly and is 100% right for every scenario or circumstance. If you have interpreted every law and requirement accurately, and your payroll system is 100% correct, then be proud because you may be the only one. I am aware that many are sure this is not the case when it comes to their particular payroll solution. This is primarily due to the complexity and nuances involved with the separate and disparate laws at a State and Federal level; it's certainly not as a result of the lack of trying.
So what is the responsibility of the Government with payroll?
The responsibility of Government is ensuring changes to legislation do not have an adverse effect on the way payroll is processed. The primary objective should be minimising the complexity in the implementation of those laws.
As a direct result of Single Touch Payroll, the Australian Taxation Office (ATO) has become acutely aware of the issues involved in interpreting requirements and translating these to be workable in real-world payroll situations. DSP's can only code to a limit while at the same time providing a system which can be configured in an easy-to-use manner. The design must allow the Employer to obtain their desired outcomes, without the process being overly complicated, which is not an easy task.
The ATO throughout the Single Touch Payroll journey has collaborated and engaged with industry culminating in outstanding results and benefits for all the stakeholders involved.
Fair Work Ombudsman, it's time to step up to the challenge of Single Touch Payroll.
Now it's time for the Fair Work Ombudsman (FWO) to follow the ATO's lead. As we are moving to digital for all interactions with Government Departments, DSP's require access to Modern Awards in a digital form. Awards would then be available to all users of payroll software and would help prevent the ongoing issues associated with errors with user input and the resulting incorrect payments being processed.
Many Awards are over 40 pages long and have to be manually interpreted by the Employer. Why is it being made so difficult for them to fulfil their obligations? Being the responsibility of the Employer to ensure the employees are paid correctly; why do we not have Modern Awards available in an easily accessible format for DSP's?
Several DSP's take the time to convert the Modern Awards to a form which can be used by their payroll solution. When following this process, the responsibilities and legal liabilities are enormous if there are errors in the translation of this information. DSP's require a standard file format (automatically updated as changes happen) by FWO used as the source of truth. It would not matter what payroll solution an Employer uses, the Modern Award templates would always be sourced from FWO.
FWO continually reminds us all that penalties are applicable for breaches of the Fair Work Act. At the same time, are not assisting by providing the ability for employers to minimise their onerous responsibilities. FWO need to provide a higher level of detail within their Guidance. Additionally, what provision is available for recourse with genuine mistakes when using payroll solutions or obtaining assistance that is not meeting the necessary standard? Not every Employer who pays their staff incorrectly is deliberately doing so or has bad intent.
Nothing I have stated above is new and has been suggested years ago, The Fair Work Ombudsman 2017/18 Annual Report is out and the stats aren't looking pretty. Now we need action and the sooner the better.