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ISSUE 6
employee was underpaid—but lack insight into how those figures were derived. This lack of transparency makes it difficult for businesses to verify payroll accuracy or resolve disputes with employees or unions. 4. Failure to address core issues When payroll errors occur, many payroll systems do not effectively identify or communicate the underlying issue. As a result, payroll teams are challenged to address the root cause of the problem at the right time, leading to recurring mistakes. Correcting surface-level issues with payroll software without understanding the deeper cause can leave businesses exposed to ongoing compliance risks. 5. Rigidness and inflexibility Payroll systems are often built on rigid software platforms that are difficult to update. When employment laws or agreements change, these systems may struggle to adapt quickly. This delay creates a risk of non-compliance during the transition period, particularly with complex scenarios that require tailored adjustments. 6. Difficulty handling complex rules Employment laws involve more than just basic pay rates. Complex rules around shift penalties, overtime, annualised wage arrangements, and minimum engagement periods can be challenging for payroll systems to handle without manual intervention. This reliance on human input increases the potential for errors, as demonstrated by a 2023 case where an employer underpaid staff by $2 million due to incorrect manual updates of pay rates.
While payroll software can reduce the likelihood of errors, it is not entirely free from potential errors or inaccuracies. Payroll processes must be supported by key elements of a robust compliance framework to adequately address potential risks. “While payroll systems are essential for managing employee schedules and processing payments, they often fall short when it comes to complying with Australia’s intricate employment laws.” Building a strong compliance framework Payroll software undoubtedly simplifies payroll processes, but for a more comprehensive approach, employers must integrate it with an independent, verifiable, and automated compliance
system. A strong compliance framework should include:
Independent verification: Unbiased checks that catch errors overlooked by self-monitoring systems. Verifiable processes: Clear, traceable records that demonstrate due diligence to regulators. Automated compliance tools: Systems that minimise human error and consistently apply complex laws. Such a framework not only reduces compliance risks but also assures that payroll operations are accurate and up to date. So, what should employers
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