How confident is your organisation in your HR and payroll compliance? Do you know what the key areas you should be concerned about?
Payroll and payroll compliance are not what you would call “trending topics”, so most people don’t realise that they often make headlines.
For instance, in just the last 12 months several 7/11 and Caltex franchisees have been found guilty of wage fraud; 80 Wollongong business were raided by the Fair Work Ombudsman; and Industry Super Australia released its report detailing how employers across the nation failed to pay $3.6 billion in compulsory superannuation obligations in 2013-14.
Getting payroll wrong is very costly. It’s not just the financial penalties your organisation faces, you also set yourself up for high employee dissatisfaction and turnover. This is why the old adage, “Nobody wants to hear from payroll until it is too late” still rings true.
In order to see the extent of the issue, we have taken a further look – what is actually happening in Australia? We decided to ask HR and payroll professionals to find out.
Over 350 HR and payroll professionals from all around the country responded to our survey on payroll and HR (hosted here on HRM), answering questions about a wide variety of topics, from payroll pain points to privacy expertise. From this and further research we created the white paper “A Human Resource Guide to Payroll Compliance”. Here are just some of the interesting facts we found out.
Number one concern
Respondents were asked to rank the areas of payroll compliance they were most worried about (with one being of most concern and six being least concern) from among the following categories: Awards and Fair Work, Termination of Employment, Data Security, Superannuation, Fringe benefits, and Global workforce.
Awards and Fair Work came out as the top area of concern, with 40 per cent of respondents choosing it as number one. But second place brought in some very close contenders: Termination of Employment was just a few points higher than Data Security, Superannuation, and Fringe Benefits (for the exact scores, download the white paper).
Australia’s payroll systems aren’t very prepared for cyber attacks
Only 29 per cent of respondents answered “very prepared” to the question “how prepared is your organisation for a systems crash, data breach, malware attack or similar interruption to your payroll system?”
A further 56 per cent said they were “somewhat prepared”, leaving 15 per cent who admitted they were “not prepared”.While that might seem reassuring, it should still be a concern to most Australian organisations because the federal government’s mandatory data breach notification comes into effect next year.
So this is not an issue you can be vague about. A payroll system contains enough data – everything from names and addresses to pay information and birthdates – to put all employees whose data is leaked at serious risk from things like identity theft. The severe reputational damage of appearing unprepared for a data breach could be difficult to recover from.
You need to be prepared to prevent a data breach, and to have a response when your organisation experiences one. As mentioned in the whitepaper: “If you don’t have a plan ready, a minor problem can become a full-blown disaster, whether that’s in public relations or employee relations.”
When asked about confidence levels in their organisation’s compliance to payroll legislation, 26 respondents to the survey answered that they felt “concerned” or “very concerned” about their organisation’s compliance to payroll legislation. A further 37 per cent answered “not very concerned” and 49 per cent responded “I’m sure we’re compliant.”
Whether or not you think these results are healthy is subjective. Is slightly over a quarter of Australian organisations being concerned about payroll compliance a lot? Where does the benchmark sit? Certainly payroll compliance can be complicated, particularly for business that are not large enough to hire enough staff dedicated to the function.
An answer for many organisations is to outsource some or all of their payroll responsibilities, but our survey reveals that the organisations that do this are often uncertain of the privacy compliance of their provider.
While 68 per cent said they weren’t sure their provider had a dedicated privacy officer, 78 per cent weren’t sure if their payroll provider maintained ISAE 3402 compliance – the standard companies should be reaching.
To find out general confidence levels, the exact rankings of the worst compliance pain points, and the superannuation challenges companies are facing get the full white paper.