INTHEBLACK July 2020 - Page 41



F E AT U R E
// C L O C K I N G O N
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RECORD-KEEPING
UNDER THE NEW
A N N U A L WA G E
AGREEMENTS
Employers must record
the arrangement in
writing and include:
• The annual wage that
will be paid, and how it
has been calculated
• Which award
entitlements are
being included
• The maximum number
of penalty hours and
overtime hours that
can be worked in a
pay period without
extra payment
The employer must record:
• Starting and finishing
times
• Unpaid breaks taken
Employers must also
undertake a reconciliation
of their employees’ annual
wages every 12 months.
MEMBER
RESOURCE
To access CPA Australia’s
Employer’s Manual and
Staff Manual for public
practitioners, visit:
cpaaustralia.com.au/
employermanual
46 ITB July 2020
While the commission’s recommendations go a
long way towards increased vigilance around payroll
compliance (see breakout, left), annualised salaries
are just one part of the remuneration puzzle, says
Mark Curran, principal lawyer at global legal firm
DWF Australia.
There are 120 modern employment awards in total
covering Australian workers, including 22 that cover
banking, finance and insurance, mining, legal services,
telecommunications and more, that currently contain
an annualised salary arrangement clause.
Curran says all employers are challenged by the
complexity of provisions across all awards and
enterprise agreements, and the amount of recordkeeping required to stay firmly within the law. He
believes it is ambiguities in the implementation of
the law that trip up many, rather than a deliberate
flouting of the law.
Geddes agrees: “While the industrial relations
framework has been simplified, complexity is still
a hallmark.”
He gives the example of a recent client who, under
one employment clause, found they had to pay an
employee eight times their base salary if the employee
worked outdoors, in the rain, on a Sunday that was
part of a public holiday. In addition, this agreement
had to be configured into the payroll system.
LONG HOURS THAT DON’T
NECESSARILY ADD UP
Other businesses in Australia that have recently
admitted to wage underpayment include the Super
Retail Group, Commonwealth Bank, Bunnings
Group, Qantas, Rockpool Dining Group, Sunglass
Hut, 7-Eleven and George Calombaris’s hospitality
company, MAdE Establishment Group.
Geddes adds that countries including Japan, the
Philippines and New Zealand are also struggling
with issues surrounding underpayment.
In December last year, Seven-Eleven Japan Co.
disclosed that it had withheld ¥490 million (about
AS$6.9 million) in overtime payments to more than
30,000 part-time workers since 2012.
In July 2019, the Philippines Supreme Court
ordered Kentex Manufacturing Corporation to
pay 1.44 million (about A$42,000) to 57 workers
found to have been underpaid.
In New Zealand, the NZ Police, district health
boards and Restaurant Brands Ltd’s KFC, Carl’s Jr,
Pizza Hut and previously owned Starbucks have all
been affected by underpayment issues.
Geddes explains that even small issues in payroll,
in time or attendance recording, when extrapolated
over a large workforce over many years, can add up
to significant exposures.
“The declining presence of unions also means
fewer early warnings of concerns in relation to
how an employee is being paid,” he says.
“What we are seeing now coming in to replace
this union presence is the media as a watchdog.”
In December 2019, the Woolworths Group hit
the headlines in Australia for all the wrong reasons.
Canberra-based legal firm Adero Law filed
a class action in the Federal Court alleging
“underpayment and systemic wage theft” on
behalf of more than 7000 current and former
salaried employees.
The action was launched by a former night-fill
manager, and is now a class action on behalf of
thousands of other workers.
Adero Law alleges underpayment by the
Woolworths Group amounts to about A$620 million,
an allegation the organisation has disputed, as well
as saying it believes the class action proceedings are
without merit.
In February this year, Brad Banducci, Woolworths
Group managing director, said the company had
analysed almost 80 million time, attendance and
rostering records of salaried store team members,
and reassured the public and shareholders that the
company is committed to rectifying any matters as
soon as possible.
As employers such as the Woolworths Group have
found, salaried arrangements can unravel if there is
no continuous auditing of each salaried employee’s
timesheet against each and every underlying award
entitlement, says Peter J. Richards, Brisbane-based
workplace consultant and former senior deputy
president of the Australian Industrial Relations
Commission and FWC.
“The salaried system needs to be simplified and
globalised in its assessment of exchanges, and
include scope for reasonable tolerances, noting the
FWC orders don’t make any mention of employees’
obligations when they are overpaid,” he says.
AVOIDING AN UNDERPAYMENT SCANDAL
To avoid penalties and reputational damage, businesses
need to seek advice on how to interpret awards
through professional or legal advisers, says Curran.
In addition, companies can use data visualisation
capacities to look at their workforce in detail, and
explore information that comes through payroll,
says Geddes.
Apps such as Asana or Trello can also provide
accountability and transparency to the wider team on
what others are working on, especially for businesses
that encourage telecommuting.
Karen Gately, founder of advisory, organisational,
leadership and team development company Corporate
Dojo, believes that great relationships with people are
at the heart of the ability of a business to monitor and
report on levels of productivity.
“Even in an office environment, it is not possible to
watch how many minutes, or hours, people are being
productive,” she says. “Employers are relying on staff
to get into a database and enter their hours and add
any relevant notes.”
Besides demonstrating integrity, staff need to be
well-trained in the record-keeping systems in place,
and employers need to make the fundamentals – such
as a good system with checks and balances – a baseline
priority, says Gately, who has worked with companies
including HP and Toyota.
These may include the new version of the bundy
clock, mobile phone apps that track time, or electronic
check-in, she says.
Gately adds that optimal work hours for those in
a professional role are the hours it takes to deliver on
the role within reasonable boundaries that also enable
them to maintain health and balance.
“If someone is working 70 hours a week, and is tired
and burnt out, they are not going to be impactful,” she
says. “Every working arrangement should be based on
mutual trust and respect.”
“IF SOMEONE IS WORKING 70 HOURS
A WEEK, AND IS TIRED AND BURNT
OUT, THEY ARE NOT GOING TO BE
IMPACTFUL. EVERY WORKING
ARRANGEMENT SHOULD BE BASED
ON MUTUAL TRUST AND RESPECT.”
KAREN GATELY, CORPORATE DOJO
QUESTIONS
EMPLOYERS
SHOULD BE
ASKING
01.
When was the last time
we commissioned an
external review of our
payroll codes and
configuration of our
payroll system to ensure
it is aligned with our
underlying awards/
enterprise agreements,
and that super guarantee
(SG) is calculated
correctly?
02.
If we pay our employees
an annualised salary,
have we confirmed
that this is (a) allowed
under our award, and
(b) appropriate given
their minimum
terms and conditions
of employment?
03.
Do we regularly test that
employees receiving an
annualised salary are
being paid at least what
they would be paid if
their entitlements were
calculated based on
the relevant award?
04.
Do we use an electronic
time and attendance
system to capture
non-rostered hours?
05.
What manual interventions
are required by our
payroll function to ensure
that our employees are
paid correctly?
06.
How does our payroll
department keep up
with its professional
development?
Source: PwC
0 7.
Have we received
employee complaints
in our organisation about
our payroll’s accuracy?
08.
How often are we
required to run back
pay adjustments or to
make disclosures to the
tax authorities?
09.
What is the capital and
training cost associated
with upgrading capture
systems for various
business sectors?
intheblack.com July 2020 47

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