Corporate Australia in danger of employee payment errors, payroll staff like to walk due to burnout

An extensive survey of payroll employees has revealed that corporate Australia is facing higher risks in employee payment errors, with a large proportion of payroll staff admitting they are burnt out, lack leadership within the company and are about to leave. The risk is higher in large companies (with 500+ employees) where 46 per cent of payroll people are burnt out, compared with just 28 per cent in small companies (under 50 employees).

What was the methodology of the research?

The research findings have come from a survey of 2178 payroll professionals by the Australian Payroll Association, Australia’s leading network in payroll training, consulting and advisory for employers. The organisation provides compliance, governance and ongoing support for more than 1100 medium-sized and large member employers around Australia.

Respondents work in firms that have from 50 to over 100,000 employees on their payrolls, with the majority having 101-3000 employees on their payrolls. The Fair Work Ombudsman recovered over $530 billion in unpaid wages and entitlements for nearly 400,000 employees for FY2022 – with large corporate employers responsible more than half of these wages.

This recovered sum was three times higher than in FY2021 and more than four times higher for FY2020. Several high-profile instances of underpayment of staff on an industrial scale have hit the headlines in the last few years such as the case involving the Commonwealth Bank, which admitted to underpaying thousands of its staff by more than $16 million.

What were the findings of the research?

Payroll people burnout prevalent in large companies

The survey highlighted that almost two thirds (61 per cent) of respondents work more than 40 hours a week, and 41 per cent are suffering from burnout. More than half (56 per cent) say their workload had increased since the pandemic. Payroll people in large companies have the highest rate of burnout, at 46 per cent, compared with 28 per cent in small companies (under 50 employees) and 35 per cent in medium-size companies (51-500 employees).

Large companies also have the highest rate of payroll staff whose workload has increased since the pandemic: 57 per cent, compared with 43 per cent in small companies and 50 per cent in medium-sized companies. When asked what factors contributed to their burnout, 49 per cent of respondents cited lack of leadership, 40 per cent lack of resources, 39 per cent lack of investment in payroll, and 36 per cent unrealistic deadlines and expectations.

Payroll professionals look to change jobs

According to the research findings, the highest rate of payroll professionals that will change jobs in the next 12 months comes again from the large companies: at 28 per cent. This compares with 19 per cent in small companies and 26 per cent in medium-sized companies.

When asked if their employer provides the necessary support, training and resources to ensure a fully compliant payroll operation, the highest rate of ‘no’ answers came from large companies: at 36 per cent, compared with 26 per cent in small and 29 per cent in medium-sized firms. This could lead to a walk-out of a sizeable proportion of payroll employees from larger firms, risking even higher rates of errors in employee payments and entitlements.

Senior management unaware of payroll imperfection

Commenting on the research findings, Tracy Angwin, CEO of the Australian Payroll Association, said: “In our audits, we have seen an inefficient use of payroll staff and technology. Payroll people are doing things manually that can be automated and that is more costly and comes with higher risk of errors. We also regularly see overpayments.”

Tracy Angwin, CEO of the Australian Payroll Association
Tracy Angwin, Chief Executive Officer of the Australian Payroll Association

“Perhaps the most alarming thing we see is the trend of senior management not understanding the payroll structure required to ensure a well-governed, compliant and efficient payroll. The number of senior company executives quietly admitting to us that they have no idea what is going on in their company’s payroll function is astounding,” Tracy said.

“With the increasing wage theft laws coming in and liabilities on executives and company directors, employers cannot just hope that their payroll people get it right, and without any oversight. We find errors in 100 per cent of our payroll audits,” Tracy Angwin further said.

“Many payroll teams are overworked because they use poor processes and tech and just don’t have the skills and technical knowledge they need. They rely on tech that often hasn’t been checked in years, and this reliance is the main cause of most of the underpayments published in the news over the past few years. There is very little time, if any, spent checking that the payroll is compliant. How many times do we hear CEOs blame ‘the system’?”

How can companies improve payroll people retention?

With a battle for payroll talent in full flow, this situation is difficult to resolve, but Tracy Angwin believes that investment in the payroll team to support retention and bringing in external specialist resources to conduct regular reviews the payroll function for inefficiencies is the most effective approach. Tracy Angwin believes an increase in underpayments and non-compliance with employee entitlements is almost inevitable unless action is taken.

“With companies under greater scrutiny when it comes to meeting their obligations in employee payments, and a lack of compliance potentially leading to significant fines and reputational damage, organisations need to know they can access specialist support to help them avoid a potential crisis through their payroll departments,” Tracy Angwin further said.

Tracy Angwin developed Australia’s first recognised payroll qualifications – the Certificate IV in Payroll Administration and Diploma of Payroll Management – and founded the registered training organisation Australian Payroll Institute, specialising in the delivery of payroll qualifications. She believes the Australian Payroll Association has been in a unique position to address the lack of knowledge and training in the business sector, company by company.

“We review payroll operations to ensure compliance and optimise a firm’s processes, efficiency, governance and controls. It also offers a payroll compliance audit to ensure employment obligations are met, awards and enterprise bargaining agreements are correctly interpreted, and leave calculations are in accordance with territory legislation,” Tracy said.

The full report can be downloaded here.