The price is right: Lessons in payroll from Dick Smith


There are some hard lessons to be learnt from the Dick Smith debacle. In February it was revealed that the failed electronics retailer accidentally short-changed more than 3,000 workers by as much as $2 million. The receivers revealed that the company might have been underpaying its employees’ annual leave loading entitlements for as long as six years. This highlights how easy it can be for businesses of all sizes to get workers’ payroll wrong. Employers can be prosecuted and receive heavy penalties for underpaying workers, even when it is a genuine accident.

However, businesses need to make sure they get it right, because the consequences of underpaying employees can be severe. It goes without saying that, more than anything else, getting pay right is an ethical obligation and fundamental to ensuring that employees are on side.

Leslie Tarnacki, vice-president of human resources and general manager, of WorkForce Software Company (WFS Australia), says, “Manual processes are often to blame for the genuine mistakes that can lead to employees being underpaid. Sometimes, errors in traditional workforce management processes can lead to overpayment too, which costs the organisation money even if it’s not illegal. It only takes one or two cases of underpayment to potentially cause problems for organisations.”

Although it was known that Dick Smith had been labouring under a legacy IT infrastructure for decades, in 2014 it began migrating its data – including payroll – to the cloud. Nevertheless, something went wrong, and it is likely that human error played a part.

Costly mistakes such as this reinforces the argument for automating employee payment processes and so reducing liability. Most large organisations have fully-automated systems, but smaller and medium-sized organisations are also moving to automate this HR function. Payroll and HRIS software companies report gains of up to 25 per cent growth in customer base over the past year.

Technology can help take the uncertainty out of employee payment processes. With the right workforce management software systems and processes in place, for example, companies can automatically track hours, awards and other factors to make sure payment is accurate at all times.

There are four key benefits companies can gain from automated workforce management platforms that will help ensure they don’t underpay employees:

1. Greater visibility

With all employee activity tracked and digitised, it is easy to view data, and integrate it with other business and finance systems. This also removes the chance of human error.

2. Automated processes

Manual processes can easily lead to mistakes. Automating processes eliminates potential errors and means that managers don’t need to spend as long on HR duties.

3. Accurate award tracking and loading tracking

Awards can be easily updated in workforce management software platforms, as can current leave loading and other special allowances. These can be pegged to workers’ tracked hours for greater accuracy.

4. Easy access for staff and managers

Most workforce software platforms, especially those that are cloud-based, provide easy access for managers, HR personnel and employees alike for greater ease of use and more efficient processes.

Finally, if an individual believes that they are being underpaid, they should refer to the Fair Work Act to check what award or agreement they fall under. In the case of underpayment, check with the employer in the event that a genuine mistake was made. If an employer has deliberately underpaid an employee, a written request should be made to fix the situation. As a last resort, a complaint can be made to the Fair Work Ombudsman.

Leave a reply

avatar
100000
  Subscribe to receive comments  
Notify me of
More on HRM
Sorry, no posts matched your criteria.

The price is right: Lessons in payroll from Dick Smith


There are some hard lessons to be learnt from the Dick Smith debacle. In February it was revealed that the failed electronics retailer accidentally short-changed more than 3,000 workers by as much as $2 million. The receivers revealed that the company might have been underpaying its employees’ annual leave loading entitlements for as long as six years. This highlights how easy it can be for businesses of all sizes to get workers’ payroll wrong. Employers can be prosecuted and receive heavy penalties for underpaying workers, even when it is a genuine accident.

However, businesses need to make sure they get it right, because the consequences of underpaying employees can be severe. It goes without saying that, more than anything else, getting pay right is an ethical obligation and fundamental to ensuring that employees are on side.

Leslie Tarnacki, vice-president of human resources and general manager, of WorkForce Software Company (WFS Australia), says, “Manual processes are often to blame for the genuine mistakes that can lead to employees being underpaid. Sometimes, errors in traditional workforce management processes can lead to overpayment too, which costs the organisation money even if it’s not illegal. It only takes one or two cases of underpayment to potentially cause problems for organisations.”

Although it was known that Dick Smith had been labouring under a legacy IT infrastructure for decades, in 2014 it began migrating its data – including payroll – to the cloud. Nevertheless, something went wrong, and it is likely that human error played a part.

Costly mistakes such as this reinforces the argument for automating employee payment processes and so reducing liability. Most large organisations have fully-automated systems, but smaller and medium-sized organisations are also moving to automate this HR function. Payroll and HRIS software companies report gains of up to 25 per cent growth in customer base over the past year.

Technology can help take the uncertainty out of employee payment processes. With the right workforce management software systems and processes in place, for example, companies can automatically track hours, awards and other factors to make sure payment is accurate at all times.

There are four key benefits companies can gain from automated workforce management platforms that will help ensure they don’t underpay employees:

1. Greater visibility

With all employee activity tracked and digitised, it is easy to view data, and integrate it with other business and finance systems. This also removes the chance of human error.

2. Automated processes

Manual processes can easily lead to mistakes. Automating processes eliminates potential errors and means that managers don’t need to spend as long on HR duties.

3. Accurate award tracking and loading tracking

Awards can be easily updated in workforce management software platforms, as can current leave loading and other special allowances. These can be pegged to workers’ tracked hours for greater accuracy.

4. Easy access for staff and managers

Most workforce software platforms, especially those that are cloud-based, provide easy access for managers, HR personnel and employees alike for greater ease of use and more efficient processes.

Finally, if an individual believes that they are being underpaid, they should refer to the Fair Work Act to check what award or agreement they fall under. In the case of underpayment, check with the employer in the event that a genuine mistake was made. If an employer has deliberately underpaid an employee, a written request should be made to fix the situation. As a last resort, a complaint can be made to the Fair Work Ombudsman.

Leave a reply

avatar
100000
  Subscribe to receive comments  
Notify me of
Sorry, no posts matched your criteria.
More on HRM