What Payroll Errors Really Cost

What Payroll Errors Really Cost

Payroll is usually one of the largest expenses for a company and can get even more expensive when mistakes happen. What kind of mistakes, and how do these mistakes happen?

Let’s take a look.

Compliance Errors = Penalties

Complying with all existing laws your business falls under is difficult, but the cost of non-compliance can prove significant. Since there are many laws focusing on the aspects of payroll, it’s vital steps are taken to follow those laws. If payroll errors lead to late tax payments, incorrect salaries or incorrect employee details – you’re subject to major penalties and other repercussions.  

Misclassified Employees = Retroactive Taxes

Your staff is either classified as permanent, part-time or contractors. When workers are classified as employees, as an employer you’re responsible for paying overtime, benefits, superannuation, insurance and payments like paternal or maternal leave. When a worker is listed as a contractor, these payments differ or don’t exist at all.

If a contractor is incorrectly listed as an independent contractor instead of a full-time employee, for example, it can prove costly, You may need to retroactively pay overtime and back taxes, and your company is then out under the spotlight by Fair Work.

Fixing Errors = Labour Hours

No error can be left uncorrected when it comes to payroll. Records must be accurate, the ATA must have every cent accounted for, and employees need to be paid their due. If mistakes are made, hours are spent correcting those mistakes instead of doing actual productive work.

In some cases, correcting mistakes may take more time then the payroll did in the first place. These same errors can be hard to identify and even harder to rectify. This will impact your bottom line.

Short Payments = Lost Trust

Your staff count on their weekly, fortnightly, monthly or annual pay to be correct to the cent. When those paychecks come later than agreed, or are not the amount listed in the contract, it can affect their personal life and lead to extreme dissatisfaction in their role. Besides a personal issue, this effects productivity and attendance, even if it only happens the once.

Payroll Error Turnover = Hiring Costs

Employees may decide to leave if there are regular payroll incidents. These employees need replacing, meaning incurring costs from recruitment, time spent interviewing and more spent training. Since turnover may increase due to payroll errors, this will lead to higher than projected costs, ruining your budget!

Aurion = Preventing Payroll Errors

Having Aurion manage your payroll means the piece of mind, it means no errors and it means satisfied employees. Manually calculating payroll leaves your business open to errors. Remove the risk entirely by joining up with Australia’s most trusted payroll solutions provider!

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Is Your Payroll Living in Ancient China?

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Outsourcing Salary Management- Three Quick Facts

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2018-06-19T10:29:18+00:00 Tags: , , , , |

Seven Payroll Myths Busted!

Watching Mythbusters this weekend got me thinking, what are some common Payroll myths perpetuated? What’s fact and what’s fiction? Chances are you’ve heard a few of these before. Today, I’ll separate the truth from the lie, the factuality from the fallacy, the wrong from the right! Here are eight payroll myths that need busting!

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Single Touch Payroll Update – October 2017

Single Touch Payroll Update – October 2017

At the recent Australia Business Software Industry Association (ABSIA) Forum, Aurion joined other key industry stakeholders to discuss the Single Touch Payroll (STP) rollout to all employers across Australia.

What is Single Touch Payroll?

Single Touch Payroll (STP) is an ATO reporting initiative designed to provide simpler, lower cost options for reporting payroll activity. The STP initiative delivers a new reporting standard to streamline existing PAYG, Superannuation and Tax reporting, which the ATO hopes will introduce efficiency and improvements for all employers, including simplified interaction with the ATO, reduce time spent on compliance activities and adoption of best practice processing.

STP requires that when employers pay their staff, the employees’ salary or wages and PAYG withholding amounts are automatically reported to the ATO as part of payroll processing. Under STP legislation, employers with 20 employees or more will be able to start reporting to the ATO through Single Touch Payroll from 1 July 2018. Employers with fewer than 20 employees must start reporting from 1 July 2019.

When do I need to be preparing for STP?

As an employer, you should have assessed your readiness for STP – tools like the Aurion STP Checklist can assist you to understand your obligations and activities you need to complete to comply with STP Requirements.

You must be using STP compliant software to manage payroll processing, produce data required to be sent to the ATO in an electronic format for transmission, and send the data to the ATO electronically via the ATO Gateway. Your existing payroll software may do all, or some, of these things. Specific information is included in the checklist. Employers are encouraged to check with their payroll solution and service providers to ensure compliance before 1 July 2018.

Aurion is committed to providing simple and automated solution for full STP compliance – contact Aurion for more information about our STP solutions for new and existing customers.

The introduction of STP means that payroll software providers will need to develop new reporting outputs and tools to produce STP reporting as part of pay run processing. For employers, this will mean extra processing steps when processing payroll.

If you have not assessed your readiness for STP, or if you do not have a plan for STP readiness, you should do so immediately. STP will require a period of system configuration and testing before the compliance date – only 8 months away.

Aurion’s Preparation for STP

Aurion have been heavily involved in consultative processes with the ATO – our STP compliant software solutions and services are currently in testing with the ATO, followed by our key customer pilot program commencing shortly. We will be delivering STP software updates progressively from October to allow customers sufficient time for extensive testing ahead of the compliance date.

Our customer education activities are also starting from mid-October. Aurion will release multiple tools to assist customers with their STP transition – including an STP checklist.

The ATO are also commencing employer education sessions in 2017, progressing from large employers to different employer groups in staged tranches. The ATO will be contacting employers progressively during November – if you do not receive information from the ATO you should contact them directly.

Aurion will be collaborating with the ATO to deliver a series of webinars about STP readiness during November. Register your interest in attending one of these FREE webinars.

At Aurion, we are committed to assisting all employers to comply with STP – as we progress towards the compliance date we will provide more frequent updates and information.

2018-05-08T14:28:24+00:00 Tags: , , |

Vulnerable Workers Amendments – Updates to the Fair Work Act September 2017

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Vulnerable Workers Amendments – Updates to the Fair Work Act September 2017

Employers are facing harsh new penalties for breaching workplace laws under the recent reform to the Fair Work Act last month. The Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 took effect from mid-September. Important changes were made to the existing Fair Work Act 2009 to better protect employees, particularly those employed by franchise chains.

The bill was introduced as a direct result of the ongoing 7-Eleven scandals involving the widespread underpayment and exploitation of vulnerable workers, as well as the difficulties experienced by the Fair Work Ombudsman in trying to recover wages for underpaid employees from smaller franchisors, who often kept very poor records or non-existent records.

These amendments will affect both employers and employees. Since coming into effect on 15 September 2017, the bill ensures that workers will be better supported and protected from unscrupulous employers. As a result of ammendments to the Fair Work Act businesses will be held to stricter standards and greater accountability will be enacted to ensure that all businesses operate on a level and fair playing field.

What Do the Changes Involve?

The bill introduced a number of changes to the original Fair Work Act, with the main ones being:

  • Increased penalties for ‘serious contraventions’ of workplace laws.
  • Employers cannot ask for ‘cashback’ from employees or prospective employees.
  • Increased penalties for breaches of record-keeping and pay slip obligations.
  • Employers who don’t meet their record-keeping or pay slip obligations and can’t provide a reasonable excuse will need to disprove wage claims made in court (a reverse onus of proof).
  • Strengthened powers for the Fair Work Ombudsman to collect evidence in investigations.
  • New penalties for giving the Fair Work Ombudsman false or misleading information, or hindering or obstructing investigations.

The most notable changes to come from the vulnerable workers bill are the significantly higher fines for serious breaches of workplace laws, which are expected to catch employers who force their employees to pay back part of their wages in cash or as part of various cashback schemes, and the reverse onus of proof applied to employers.

Now, if an employer doesn’t keep or provide payslips and an employee claims that they have been underpaid, the onus is on the employer to prove that they have paid their employee correctly. This means there is no more incentive for dishonest employers not to provide payslips.

In addition, from 27 October 2017, franchisors and holding companies can also be held responsible if their franchisees or subsidiaries breach any of these workplace laws (whether they knew about it or they should have known about it and could have prevented it).

What This Means for Employers

If you aren’t already, you should be taking steps to reduce risk and avoid penalties by:

  • Considering outsourcing payroll to a reputable Outsourced Payroll provider who takes compliance and risk seriously
  • Ensuring you have proper record-keeping methods, systems and processes in place to prevent false, inaccurate or misleading records and pay slips from being produced
  • Undergoing a Fair Work Compliance Audit to ensure you are meeting your pay slip and record-keeping obligations
  • Communicating Fair Work compliance internally to ensure managers fully understand these changes, and that any changes to systems and processes are also understood and adhered to

At a practical level, satisfying employer obligations can be confusing and costly but this is a good opportunity to reassess your current pay slip and record –keeping processes. For the majority of employers who already do act fairly and honestly, these amendments won’t make much of a difference to how you run your business. They do, however, present a good opportunity to reassess your current pay slip and record-keeping processes to ensure you are meeting your obligations in the most effective and efficient way.

A reliable Outsourced Payroll provider can take much of the pressure off by ensuring accurate, compliant and timely payroll, every time. With the introduction of these new changes to workplace laws, now is a good chance for you to look closely at your current systems and processes and consider the additional security and peace of mind an Outsourced Payroll solution could bring to your business.

What This Means for Employees

As an employee, this bill provides greater protection against unscrupulous employers and makes it possible to get help and support if you are being treated unfairly.

If your employer is asking you to use your own money unreasonably, this could be unlawful. You can:

What This Means for Our Clients at Aurion

At Aurion, our clients can be reassured that we have proper record-keeping arrangements in place and that we continue to look for ways to improve our processes, reduce risk and minimise chances of contraventions of the Act. We always have and always will continue to cooperate fully with any Fair Work Ombudsman investigations or enquiries.

We are proud to work closely with businesses all around the country to improve systems, ensure compliance and reduce risk through a range of Outsourced Payroll and HRIS solutions. If you have any concerns or enquiries about how the vulnerable workers amendments may affect your business or would like to discuss implementing a tailored payroll solution, please don’t hesitate to contact us on 1300 287 466 or by sending us a message online.

2018-05-08T14:28:25+00:00 Tags: , , , |

ATO Update – Electronic Payment Summary Changes

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ATO Update – Electronic Payment Summary Changes

Employers may be aware the ATO released an update on the electronic payment summary changes for the 2016-2017 Financial Year. These changes relate to: Acceptable versions of the PAYG withholding payment summary annual report specification for the 2016–17 financial year

Your users are now able to use version 12 of the payment summary annual report (PSAR) reporting specifications to lodge their 2016–17 annual report through the portals. If employers are unable to update their software to comply with version 12 of the PSAR reporting specifications, they may still report for the 2016-17 financial year using versions 9, 10 or 11 software.

However, employers will be required to use ATO printed forms for both their payment summary and annual report if they are:

  • using pre-version 12 software, and
  • have workers who are:
    • working holiday makers (WHM) employed from 1 January 2017, or
    • in receipt of exempt fringe benefits.

Employers will also be required to use ATO forms if earlier versions do not apply to their payee’s circumstances (e.g. payees with non-super annuities and employees with foreign employment or employment termination payments).

So if the payer has not made payments to working holiday makers/non-super annuities or if the payee has received exempt fringe benefits, they are not necessarily required to update their software and can use the 2015-16 format.

What this change means for Aurion users

For Aurion users, version 12 of the payment summary annual report is available (ER034_BLK_GCERT) in both versions 10.4 MR31 HF1 and 11.27.1. This means that customers will be on the latest version of the PSAR which includes the changes for Working Holiday Makers and exempt fringe benefits if your Aurion environment has been upgraded. If customers are still on earlier versions of Aurion and have not employed any Working Holiday Makers and are not entitled to any exemption from fringe benefits (according to section 57A of the Fringe Benefits Tax Assessment Act 1986), then you may use the older version of the PSAR for the 2016/17 year.

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2018-05-08T14:28:30+00:00 Tags: |