The processing of payroll sounds simple enough, however, with continuous changes to legislation and statutory obligation requirements, its never been more important to ensure your payroll is completed correctly. It is critical to get payroll right not only to avoid legal and financial complications but also ensure your most valuable asset, your employees remain positive and engaged.
In this blog, we will discuss the importance of getting payroll right and the consequences of making mistakes in the payroll process.
Payroll errors can have a significant impact on employee satisfaction. When employees receive incorrect pay, they may lose trust in their employer, which can lead to low morale and decreased productivity. Paying employees is not the only important component of payroll, you must also ensure that you accrue leave correctly and are across the various legislative changes and introduction of new leave categories occurring in the industry.
One of the most significant reasons to get payroll right is to meet your business statutory obligations. Over the past several years the ATO have increased the amount of information that a business must report via Single-Touch-Payroll. This information not only is mandatory to be lodged but needs to be timely and correct. The information could be used to confirm, adjust or cancel benefits the employee may be receiving. Failure to comply with tax laws, for example, can lead to fines, penalties, and interest charges.
Correctly accruing superannuation and paying by the due dates is an important component of managing employees. Not only are there penalties for late lodgement of superannuation but directors may be personally liable for failure to pay employees contributions. With the introduction of Single-Touch-Payroll it has never been easier for the ATO to spot check business contribution payments and request an audit.
A company’s reputation is critical to its success. Mistakes in payroll can harm a company’s reputation, particularly if the errors are widespread and affect multiple employees. When businesses receive bad press on not paying employees correctly it makes it difficult to obtain trust and potential new employees in the future.
Having the correct payroll software is essential to ensuring payroll is completed correctly, on time and lodged with the appropriate governing bodies. With third-party add on to manage employee timesheets and awards as an example its never been simpler to manage employees and their payroll. Furthermore, a great payroll system allows for employees to review their own payslip, enter their own leave (with managers online approval) and easily self-service for key information relating to their employment.
We have been engaged multiple times by our clients to complete an audit on their payroll and have found that over 50% of businesses have been completing their payroll incorrectly. The main areas found are;
- Leave not accruing as per the employees contract or award due to complex employee earnings including ordinary hours, overtime or shift work
- Superannuation not automatically increasing to the statutory percentage and business under paying superannuation
- Employee payslips not correctly stating earnings and leave accruals
- Single-Touch-Payroll not correctly being lodged with the ATO and employee records not updated to be compliant with latest STP requirements.
If you are unsure if your payroll is being completed correctly, have the team at Omnia Business Solution complete a quick audit and set out how you compare to best practice. After all, it is important for every business to look after their biggest asset…. Their employees!!!