Dangers of Manually Interpreting Pay Conditions - The Complexity of Modern Awards

Author Image Written by Garth Belic

Australia has one of the most complex workplace laws in the world designed to provide minimum working conditions and entitlements that an employee is entitled to.

Since the system was introduced in 2010, Modern Awards override any contractual agreements made between employers and employees on minimum entitlements and pay, with most industries having their own modern award.

In addition, the National Employment Standards (NES) are 10 minimum employment entitlements that are required to be provided to all employees. This includes annual leave, sick leave, maximum weekly working hours, public holidays and notice of termination conditions.

One wrong step can result in severe penalties and like many of the big businesses lately, featured on the front page of the newspaper for wage theft.

What’s most common amongst many Australian businesses are the manual methods of calculating complex pay conditions.

From manual timesheets to redundant rostering systems, employers are resorting to building spreadsheets that slice and dice shifts to meet the different pay rates, e.g. columns for ordinary time, overtime 1.5, overtime 2.0, public holidays, afternoon shift and night shift.

Unfortunately these only usually cover the most common pay conditions and don’t always cover the entire modern award. And there lies in the dangers of not having a comprehensive payroll system.

Conditions such as minimum hours of work per month are often overlooked with most pay runs occurring weekly or fortnightly. Other situations such as minimum rest periods in between shifts are enforced otherwise additional penalty rates are applied - a major factor in labour budget blowouts.

Recently, Fair Work Australia has also released additional changes to many modern awards that will require businesses to interpret and implement within their workplaces - something that is becoming more common, placing greater pressure on employers to keep up.

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Most commonly, payroll teams often find themselves chasing ambiguous timesheets, reviewing shifts against modern award conditions and also reviewing leave requests against employee balances to ensure they’re kept as accurate as possible.

Unfortunately, as is the nature of manual calculations, things can be left out and errors are common.

To compound this, these checks and balances often require the review of multiple personnel to serve as a safety net to cover for errors.

This usually starts with a manager approving timesheets before being passed onto a payroll office to review and then onto a CFO or Financial Controller to approve as a final step.

This triple and potentially quadruple handling proves to be an incredibly inefficient method of processing payroll and doesn’t necessarily guarantee a 100% accuracy strike rate.

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  1. Accuracy in the application of modern awards and NES conditions
  2. A streamlined method of processing payroll to improve efficiency

Processing your payroll through a smart cloud payroll software will guarantee that all pay conditions and entitlements are applied during each payroll run.

Given the regular changes to modern awards, updates are made and applied directly onto the software to ensure that only the latest conditions are used, saving employers the headache of worrying about missing pay conditions.

Rather than the traditional method of multilevel approval processes during pay runs, smart cloud payroll software can reduce this down to a single level of approval as the solution itself acts as a safeguard for any errors or missed entitlements that have been made by managers and payroll staff.

As a result, approval processes usually start with managers and are then immediately subject to final approval by the CFO or Financial Controller, saving businesses hours of manual work each week.

Additionally, to further streamline your payroll and rostering process, Pay Cat strongly recommends the use of an integrated cloud payroll and time attendance software, which can help with mitigating labour budget blowouts and manage attendance in realtime.

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As the Fair Work Commission continues to renew focus on ensuring employers are complying with minimum employment conditions and entitlements combined with a more informed workforce, businesses are extremely vulnerable to regulatory breaches and subsequent penalties.

Not only can smart cloud payroll software save you thousands of dollars in potential breaches, but also help with wage control while still remaining compliant within the ever-changing landscape of modern awards and minimum employment conditions.

If you're interested in seeing how we can help your business make the transition, get in touch to book a demo with us today.

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