Payroll is complex, detailed, and laborious. Have you considered how much time you spend each week on taxes, payroll, and working with accountants?
Yet due to strict legal requirements, it’s important to get it right and ensure you’re compliant. Research shows payroll errors by Australian employers cost as much as $4.4 million per year.
So what are some of the most time-consuming payroll tasks? What can your organisation do to address the amount of manual work required and ensure accuracy and time efficiency?
Termination calculations, long service leave averaging, and award interpretation are among the most demanding tasks your payroll team might be dealing with. Saving time on these major payroll tasks frees up more time for strategy and high-value activities within your organisation.
1. Termination Calculations
Termination calculations require meticulous calculations and a thorough understanding of the regulations. The regulations can change from time to time, with strict requirements for payment within given time frames.
The things you’ll need to take into account include outstanding wages, pay for notice period, payment for annual leave, accrued long service leave, any additional contracted benefits, and allowances.
You might need to factor in allowable deductions under the award, enterprise agreement, or the Fair Work Act 2009. Termination calculations need to be calculated correctly, with little margin for error or the employer could be facing financial penalties. Other consequences could include damaged business reputation and claims for unpaid amounts.
Each of these errors not only potentially cost your business money but also time wasted on corrections and significant business disruptions. Rectifying brand damage and addressing claims takes away additional resources and time from your team.
Want to know more about processing redundancy payments? Download our extensive Redundancy Process & Taxation Guide.
2. Long Service Leave Averaging
Generally, ‘ordinary pay’ is the actual pay received by an employee for working his or her normal weekly hours at his or her ordinary time rate of pay, at the time the employee takes long service leave, or ceases employment and has long service leave paid out in lieu on termination. Other components of salary may be included in the definition of ordinary pay in certain circumstances.
The rules around long service leave calculations can vary depending on your state or territory. In New South Wales, you’ll need to factor in the employee’s days of service as well as their average ordinary weekly wage. For Victoria, you also need to take into account ordinary pay and the period of employment. As with termination calculations, there’s little room for error and you need to ensure the averaging figures are calculated correctly so you’re paying employees the right amount.
Outsourcing these activities to payroll experts could also offer the same benefits. Additionally, an automated process, such as with a regularly updated software program, can ensure accuracy and save you time.
3. Award Interpretation
Awards change regularly, so are you confident your business is keeping up with the very latest changes and fully compliant?
Awards can involve complex regulations and rules, and you need to take into account penalty rates, overtime rules, and conditional allowances. If your business is doing this manually, are you verifying your calculations reflect real-time information, such as changes to rules?
Working with an outsourced payroll expert can streamline the process, saving your business time. The expert can guide you through the entire process. This would include processing payroll for different employment conditions under multiple awards, individual contracts, and enterprise agreements.
4. Employee Onboarding
When onboarding new employees, you’ll want to make sure you’re fully compliant and provide them with all necessary information. You’ll need to give them forms like the Fair Work Information Statement and a Casual Employee Information Statement where relevant, and then obtain details for the superannuation guarantee contribution.
Your employee agreement must reflect the requirements of the Fair Work Act. Letters of engagement, tax file number declarations, emergency contact details are some of the other documents involved in onboarding.
Beyond the legally required documentation, your organisation might incorporate other processes for an optimised induction, to drive higher employee engagement and productivity. For example, you have a structured training plan and follow up with surveys to understand the employee experience of your induction program.
All of these employee-onboarding activities can be time-consuming while requiring meticulous attention to detail. An outsourced HR partner service can assist with implementing a streamlined employee onboarding process that checks all the boxes. They can ensure it complies with regulatory requirements and provide you with the right tools for an effective induction and onboarding system.
5. Manual Leave Applications + Timesheets
Timesheets are an invaluable tool for any kind of business, of any size. A timesheet tracks when your staff work, but they can provide far more valuable insights than just their working hours.
You can use them to check shifts and create strategies for projects, ensuring your operations are optimised in terms of employee sourcing and input. Timesheets are also essential for payroll calculations, and you might be legally obligated to track hours to a certain detail.
So how can you streamline tracking time and attendance and leave applications? Cloud-based HR management software offers an ideal solution. This type of software allows you to record more detailed activities performed by each employee.
You can identify how much time employees are dedicating to different tasks. In turn, this can assist with decision making about marketing budgets and time allocation for different functions like customer service and distribution.
You can glean insights into their efficiency, distribute workloads more fairly (in real-time if necessary), and track projects more accurately for invoicing clients and assigning resources.
Additionally, if your employees are using manual timesheets, you’re having to enter the data again into your system. Software can eliminate double entry so your employee fills out their own electronic timesheets and you capture that data for your records and for further analysis.
6. Tax Averaging Calculations
The ATO allows eligible entities to work out their tax payable with income averaging. This is usually to help special professionals, primary producers, and others who might experience significant income fluctuations year to year, by averaging the tax they pay.
Income averaging calculations can be complicated, but with an outsourced payroll expert and an automated process, you can save time on your tax averaging calculations.
A regularly updated software platform can also make sure you’re always keeping up with changing tax rates and take care of a lot of other manual tax calculations you might have to do for payroll.
If you use an integrated solution, you’ll be able to manage just about every facet of your HR and payroll while minimising double entry of data and repetitive, manual processes.
7. Award Updates
Awards are the minimum employment terms in given industries and occupations. They include things like wages, working conditions, penalty rates, and leave entitlements. Awards can be subject to constant updates and can vary by state and industry.
Breaches can lead to financial penalties for businesses of hundreds of thousands of dollars. For individuals, wage theft legislation may be in force, criminalising underpayments. As such, awards form an important part of your organisation’s compliance policy.
For example, Awards were updated throughout 2020, as announced by the Fair Work Commission. These apply across a wide range of industries. Keeping track of changes, along with understanding the differences across states and territories can be a time-consuming task.
For this reason, a lot of businesses rely on automated systems like constantly updated HR software, payroll software with Award interpretation. And just as important can be working with outsourced payroll experts that will guide you through the process. Outsourced experts, for example, can provide tailored compliance checklists to heighten your compliance efforts and reduce risk.
Check out our Resource Library – include Award Summaries for multiple industries.
Save time partnering with an outsourced payroll expert
Getting payroll done doesn’t have to be a labour-intensive proposition. With automation and outsourcing, you can significantly reduce the number of hours you’re spending on repetitive payroll activities, while ensuring accuracy and fulfilling compliance requirements. Partner with an outsourced payroll processing expert and free up more time to spend on activities that add value for your business.
Employment Innovations are industry-leading experts providing outsourced payroll and HR services for small to medium businesses. Take the guesswork out of payroll processing and firm up your operations saving you time and giving you peace of mind. Contact us today and book your free consultation.
The information provided in these blog articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact Employment Innovations for advice.