Key points:
- Automated payroll compliance tools offer convenience but can leave businesses exposed to legal and reputational risks
- The new wage theft laws, effective from January 1, 2025, impose severe penalties on employers who deliberately underpay employees
- Expert analysis is crucial for businesses with complex compliance obligations
Underpayment scandals have been rife in recent years with cases at prominent employers including Woolworths, Chatime, Qantas, NAB, BHP, 7-Eleven and the ABC. Therecently introduced wage theft laws have prompted many businesses to put their payroll compliance under a microscope. To assist in easing the compliance stress, there are several automated payroll compliance tools on the market, ready for businesses to ‘plug and play’ as part of their tech suite. But payroll compliance is complex and relying on the limited scope of automated software can leave businesses open to legal and reputational risks.
So, what are the risks, and when is it time to source more in-depth advice?
What are the new wage theft laws, and what are the risks or non-compliance?
As of 1 January 2025, employers who deliberately underpay their employees now risk facing criminal charges. Under the new wage theft laws – part of Labor’s suite of Closing Loopholes reforms – companies could be fined up to three times the underpayment amount, or $7.82 million if the amount of underpayment can’t be determined. Beyond the potential for charges and fines, there are reputational risks too – which could impact relationships with suppliers, clients and even perspective employees down the line.
These new laws and associated risks have led to an uptake of payroll compliance software, as many businesses look to avoid making compliance errors. Off-the-shelf software offers businesses ‘plug and play’ solutions, which can help to ease some of the concerns for business leaders. However, most off-the-shelf software offers broad analysis, and cannot be tailored to more complicated compliance needs, which can lead to concerns down the track. With the potential for large fines and criminal charges now on the cards, businesses with complex compliance obligations would benefit from engaging in an in-depth payroll compliance review. Not only does it offer more tailored analysis, but a deep dive into payroll processes also means concerns can be identified quickly and addressed before major ramifications arise.
Why choose expert analysis over automated compliance tools?
While compatible compliance software can be useful for businesses, there are several reasons that leaders should consider investing in expert advice over solely trusting automated tools:
- Context is key: Automated tools can only work from data provided by the business – but these tools struggle to account for industry-specific workforce management processes that inform the data. Things like pay cycles and rostering processes can differ from industry to industry and impact payroll data as a result. Expert advice can incorporate an understanding of the relevant industry landscape and its impact on compliance in a way automated tools cannot.
- Business knowledge is power: Automated systems aren’t able to account for an organisation’s systems or workforce management processes and how they inform effective rostering, accurate time capture and automated ward interpretations. A real-life expert can deep-dive into this business information, which helps to tailor compliance advice and avoid unnecessary errors.
- Getting the whole picture: Data often comes from multiple sources or systems, which means it can be incomplete or of poor quality. Expert analysis can develop informed assumptions and bespoke business rules to clean, consolidate and correct data – something which cannot be easily incorporated into automated compliance tools.
Expertise in action
At Pitcher Partners, our Digital and Data Solutions experts have built tailored solutions for clients in a range of industries to overcome complicated remediation calculations. Often, this has occurred after the client has realised that the original software used was unable to provide enough detail to meet their payroll compliance obligations. While the software can be useful in some circumstances, the more complicated the compliance needs, the more likely you’ll need in-depth analysis that software cannot provide.
What to do next
It can be tempting to rely on automated payroll compliance tools for the ease, and relatively low-cost convenience that they provide. While pre-built automated tools may be suitable in some circumstances, an in-depth review from an expert can offer more sophisticated analysis – ensuring you get your compliance obligations right and avoid any legal and reputational risks in the process.
