The five most common payroll mistakes by major companies
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Jun 3, 2019
The five most common payroll mistakes by major companies
Tracy Angwin, CEO and founder of Australian Payroll Association and Director of Payroll HQ, offers an insight into the most common payroll mistakes.
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SuppliedTracy Angwin gives an insight into the most common payroll mistakes.
With more than 25 years' experience in the payroll sector, Tracy Angwin knows her way around wages.
The CEO and founder of the Australian Payroll Association spoke with WILLIAMS MEDIA about the five most common employee payment errors by major companies.
1. Superannuation
A lot of employers think superannuation is 9.5 per cent on gross earning, when it's actually 9.5 per cent of Ordinary Time Earnings (OTE).
It becomes important when paying overtime, which is not OTE. This is where a lot of employers overpay staff.
Conversely, there can be clauses within an EBA where employees are paid an allowance at overtime rates, which superannuation is paid on, because it is not actually overtime.
The devil really is in the detail when it comes to what superannuation is payable on and what it's not.
Super is sometimes paid on leave loading, but it depends whether the employee has given up the opportunity to work overtime.
2. Long service leave
Long service leave can be calculated differently depending on what state you are in and the hours you work.
There are eight different types of long service leave legislation in Australia, which can be difficult to navigate.
It's important to remember that long-service leave is always kept in weeks, not hours.
There is also the question of what constitutes a week.
In some states, parental leave will count towards long service leave, while in others, it doesn't.
If someone comes back to work part-time and then decides to take a week of long service leave, an employer has to value the week based on a combination of the currently weekly wage, average wage over the past five year, and in some cases, what their average earnings are since they began working there.
Source: Depositphotos
3. Fair Work Information Statement
Many employers, particularly ones in smaller companies, fail to provide a Fair Work Information Statement to their employees.
This constitutes a breach of the Fair Work Act and can carry fines of up to $62,000.
It's a matter of printing it off the website and giving it to someone, so it's not hard to fix up.
4. Incorrect application of award in relation to overtime
Some people get paid overtime after a certain amount of hours in a day, while others could get it after working 38 hours in a week, or based on a four-week roster.
Employers often incorrectly interpret the award in relation to overtime.
Your award tells you when overtime is applicable, even if it means being eligible without working a 38-hour week.
It's something that often trips people up.
5. Sick leave
As part of the National Employment Standards, Fair Work says that an employee is entitled to 10 days sick leave a year.
They don't say how many hours, just how many days.
If you work five days for 38 hours a week, that means you get 76 hours a year.
However, if you're someone that likes to have Fridays off and instead work 9 and a half hours each day from Monday to Thursday, that means your ten days sick leave comes to 95 hours.
This is where employers can potentially underpay their employees.
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