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Software underinvestment is causing staff underpayments in Australia: Employment lawyer

Software underinvestment is causing staff underpayments in Australia: Employment lawyer

Employers are still using ‘cheap foreign technology’ not adapted to comply with Australian workplace law, says Andrew Stirling.

Credit: Brodie Miller

Employer and regulatory under-investment in technology that automates correct pay conditions is leading staff underpayment, an employment lawyer has told Senate inquiry.

Andrew Stirling, a former lawyer at Allens and now partner at Tanda PaySure, the wage compliance division of Australia-based company Tanda, has made six recommendations to the federal government in a written submission to the inquiry into unlawful underpayments.

The Australian government is consulting with employers on complexity around award rates over concerns about new timesheet rules for salaried staff that came into effect earlier this month.

The Fair Work Commssion’s new annualised wage arrangement means employers in multiple award categories must create, and for 7 years, retain records for hours worked (and non-paid breaks) by salaried staff, and any extra pay for overtime.

Two key recommendations made by Stirling were for the federal government to fund the Fair Work Ombudsman’s (FWO) investment in payroll calculation technology, and for the FWO website to pilot an accurate pay calculator that lets staff identify if they are being underpaid.

Stirling said politicians and regulators need to take their share of responsibility on the underpayment issue to assist employers who are trying to navigate a complicated industrial relations system but are struggling with the complexity of compliance.

He said many employers are not investing in payroll calculation technology and still use outdated manual processes or are using cheap foreign technology not adapted to comply with Australian workplace law.

“Practical and legislative support from the government would encourage uptake of technology that does comply, which would, in turn, reduce underpayments.

“Employing more Fair Works inspectors isn’t the answer. This may lead to a few more prosecutions each year. If we really want widespread, improved compliance outcomes there has to be a fundamental technological rethink,” Stirling said.

Stirling called for funding for FWO to invest in payroll calculation technology. He said the FWO would use the technology for its iwn compliance activities and would also make it available to employees and employers so that they could work together to achieve better compliance.

“Sophisticated payroll calculating technology is available on the market to manage award complexity. If the government encouraged the uptake of this technology by the FWO and by employers it would lead to better compliance and few instances of underpayment,” he said in the submission.

Stirling also recommended that the FWO pilot the use of a true payroll calculator on its website to give users an accurate picture of gross wages payable under an award.

He said that last year, the FWO had more than 6 million calculations performed on its website ‘pay calculator’ which is the only publicly available way for employees to check their wages.

The difficulty with this tool, he said, is that it doesn’t calculate pay at all. This means employes can’t properly check their wages. It simply provides rates of pay based on award classification and age. 

At best, the information in the FWO’s pay calculator might help an employee to identify that they are being paid the incorrect hourly rate. Armed with the correct hourly pay, the employee would still need to manually celebrate their pay based on rules in the modern award to determine if they had been underpaid and to what extent, Stirling said.

He added that without a true payroll calculator, many employers don’t know what to pay and employees don’t know what they should be paid.

“A true payroll calculator, available to both employers and employees, is far more likely to lead to widespread compliance than simply giving the FWO more funding to undertake more of the same regulatory activities. More of the same is not enough. Australia needs to completely rethink how compliance can be achieved and monitored at scale,” he said.

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