Understanding the areas of your Payroll system that are most prone to errors can do wonders for your risk minimisation. In our experience, some of the most common issues in Payroll systems arise from the interpretation of awards or the handling of data going into systems.
Interpretation of Awards
Australia’s award system is complex and difficult to interpret. Therefore, it’s no surprise that award interpretation tends to be most problematic for a lot of organisations, particularly small businesses that can’t afford legal advice.
There are lots of organisations and resources in the market that can help make sure you’re paying people based on correct interpretations of the relevant awards, but these tend to be expensive and time-consuming, and they can’t offer a guarantee of the accuracy of their interpretation either.
Not only this, but the implementation of your interpretations of awards into your Payroll software can be just as difficult, especially as your interpretations change in the future due to legislative change or legal precedent.
Fortunately, solutions are arising for these issues. At AgileXperts we work with Payroll Standard®, an effective solution for integrating your award interpretations across systems, even as they change.
Unfortunately, there’s no foolproof way to make ensure your interpretations are correct, so the next best thing is to ensure you apply the same interpretation consistently over time and across different platforms. That’s what Payroll Standard® delivers.
Making sure you have the proper resources and legal support when interpreting awards and integrating them into your systems is a critical step toward mitigating the risk of under or over payments.
Errors in Data
There’s always the potential for Payroll software itself to have bugs, but this is uncommon and difficult to miss. As long as each of your individual systems is robust, well-designed and well built, they’re going to be able to correctly handle the data they’re given to ensure the correct pay.
This means that the main weak point that can cause payment issues is the data your systems receive.
Issues with data being transferred between systems (so-called “integrations”) tend to be obvious – if data is being corrupted between one system and the next, it’s usually very easy to discover. Working with a systems integrator during the implementation of your system is likely to prevent these issues from occurring in the first place.
Therefore, the weakest place in any of your technical systems is the data they’re being given by your people and processes throughout your Business-As-Usual operations.
Bad data can be caused by anything from issues with timesheets and the recording of hours, to incorrect data in your HRIS systems, leading to people being paid based on the wrong award classification.
Incomplete data integration between HRIS and Payroll systems can also lead to real challenges in tracing Superannuation accounts – a massive problem that will only escalate in importance in the near future.
If your technical Payroll systems work, and you have the culture and processes to ensure they’re being given the correct data, then your employees are almost definitely going to be paid correctly.
Therefore, the best way to make sure your organisation’s Payroll system is delivering a great outcome is to understand, document and refine your processes.
It’s also helpful to be aware of the risks of operational habits which have been adopted over time and so be flying under your compliance radar, yet where non-compliance can accidentally exist.
Every piece of data you’re not documenting around working times, rosters, and what award entitlements your people are eligible for constitutes a risk of incorrect payments.
Along with this, any data in your systems that doesn’t have processes in place to ensure its accuracy and consistency also creates a risk.
Being aware of these risks, and taking measures to minimise them, can help ensure your Payroll outcomes are compliant. Minimising the risks around collecting data could involve training your managers to understand their obligations and the ramifications of their decisions, keeping checklists to make sure all relevant data is being collected or leveraging alternative data sources to cross-check the data that exists in your primary data sources.
Award interpretation and proper handling of data tend to cause many of the Payroll issues we encounter. In essence, this all comes down to the idea that if your systems are getting bad data in, it’s most likely that the data they’re spitting out isn’t going to be accurate.
Ensuring your systems are getting accurate data is one of the best things you can do to avoid problems with your payroll.
Businesses can email firstname.lastname@example.org call 1300 287 213 for free first-step advice on how to ensure your payroll processes can safeguard your payroll compliance. Follow us on LinkedIn or sign up here to receive our articles direct to your email inbox.