04:05
ISSUE 5
Misconception Two: Compliance Controls Can Wait Until After Implementation The implementation of a new payroll system often takes anywhere from 12 to 18 months. Waiting until after this process to introduce compliance and governance controls is a risky strategy. Over this extended period, errors can compound, potentially leading to significant underpayment or overpayment issues within the business. For a 6-year remediation, delaying required back payments by just six months can increase the amount owed to employees by over 4%—a steep cost of inaction. This is due to compounding interest across six years, even during a time of historically low interest rates. Now, with today’s higher rates, the impact of compounding interest on any future remediation payments is even more significant. In a post-2022 environment, what could have been a manageable situation may quickly escalate into a serious financial challenge. “Out of the six largest remediation projects that I am currently working on, five of them had recently implemented a new workforce management system in the previous 2 years, and have still had issues arise.”
1. All of our customers faced some sort of issue with data maintenance, such as the recording of employee contract details (grade, classification, and contracted hours). Many also struggled to accurately record paid and unpaid breaks or failed to update rosters when staff worked outside their scheduled shifts. 2. Incorrectly configured rule engine - Misconfigured rule engines of complex overtime rules are common
pitfalls caused during system setup. We frequently discover
misalignments in how overtime and penalties are calculated, compared to how businesses intend to interpret awards and enterprise agreements. 3. Incorrect rates - Incorrect rate setups are a common issue, often due to changes in legislation. For example, 60% of our customers have encountered problems where junior rates continue to apply even after employees have outgrown the junior status. To clarify, these issues aren’t due to flaws in the systems themselves but stem from external factors related to people and processes when they are being implemented and used. In mid-sized to large organisations, the sheer volume of data makes it increasingly challenging for payroll teams to review everything, meaning human oversight and operational processes become more important than technology in ensuring ongoing compliance.
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