HRBC Forum Summary

Underpayment and wage compliance – getting it right.

Our September HR Breakfast Club featured a presentation from Mariano Rossetto. Mariano is a director of forensic services at Vincents – a national accounting firm in Australia. Mariano has an extensive legal background and recently, he has been attending to several underpayment matters.

Mariano’s presentation discussed whether a business’ payroll system records and stores data and correctly quantifies wages and benefits payable under a wages instrument. In doing so, Mariano delved into the three steps required for the correct quantification of wages and benefits.

Enterprise Bargaining Agreements and Awards

Before discussing the three steps, Mariano conducted a quick quiz which featured the following questions.

  1. How many of you are legal experts at interpreting EBAs/Awards?
  2. How many of you were intimately involved in the implement of your employer’s current payroll system?
  3. If you did not implement it, how many of you have assumed it is correctly applying the EBA/Award?
  4. How many of you have read the EBA/Award from cover to cover?
  5. How many of you fully understand the implications of each clause of the EBA/Award?
  6. If you are none of the above, who has done this, and then go back to the first question.
  7. Have you had a “real” payroll system audit/review?

The purpose of this quiz was to shed light onto how little some employees may know about their payroll system and their EBA/Award, even though they play a pivotal role in the daily employer/employee relationship. Assessing these questions can allow us to consider whether a payroll system properly quantifies wages and benefits. To do so, Mariano believes we must understand three pivotal steps.

Payroll System Audit/Review

Mariano discussed the following three steps which are vital to understand when considering whether your payroll system properly quantifies wages and benefits:

  1. Interpretation and application of the wages instrument, PLUS other areas such as tax law.
  2. Collection of appropriate information and sufficient data.
  3. Use of system/s to accurately record and calculate the interpretation of the wages instrument.

Mariano proceeded to highlight each of these steps in greater depth.

Interpretation of EBA/Award

Mariano identifies interpreting EBAs/Awards as the single biggest issue in relation to wages underpayment. As he mentioned in his short quiz, the vast majority of employees, and even a lot of employers, are not going to be experts in interpreting EBAs/Awards. Mariano discusses the potential for ambiguity when interpreting EBAs/Awards and used real-life examples such as minimum and ordinary wage, and meal breaks to demonstrate how EBAs and/or Awards can be easily misinterpreted. Mariano also discussed manipulating the data to ensure it works with the payroll system and so that it does not unfairly enrich either employee or employer.

Appropriate Information and Sufficient Data

Mariano continued his presentation by discussing the need to obtain appropriate information and sufficient data when interpreting an EBA/Award. He mentioned that any interpretation carried out needs to be overlayed onto the business operations and mode of working with staff requirements. Implementing this step will then allow the following to be identified:

  • What information will need to be captured?
  • What individual circumstances/situation arise that needs to be identified and resolved to ensure a proper calculation?
  • What systems and processes need to be put in place to capture authorisation of changes?
  • Will your data be captured, stored and accessible for at least 6 years?

Mariano deduced that by gathering appropriate information and sufficient data, employers and employees will be able to succinctly interpret their EBAs/Awards and in turn, implement systems that ensure practicality in the workplace relevant to the payment of staff.

Payroll Systems

Mariano concluded his presentation by discussing the necessity of implementing reliable and updated payroll systems into a workplace. In doing so, he discussed several questions that a company should ask themselves in relation to their payroll systems. These questions focused on ensuring that companies are regularly assessing whether their payroll systems are up to date and whether the payroll systems work in conjunction with other aspects of the company. Mariano’s presentation stressed the importance of payroll systems that do more than just ensure staff are getting paid. Quality payroll systems ensure that companies are covered should they be audited and looks to capture and disclose necessary data relating to payments in the workplace.

Mariano’s presentation gave us an in-depth perspective into the many issues that can arise in relation to the underpayment of wages. His insight into EBAs/Awards is evident that it is important for employers and employees to understand the circumstances under which the payment of wages can become problematic. At the end of his presentation, Mariano mentioned that a well prepared, tested and audited system did not just adhere to one or even two of the three steps mentioned above. Rather, efficient and quality systems will assess all three steps and determine how they can be best implemented within the structures of an organisation.

To register for future HR Breakfast Club forums, visit our monthly forum page and register to attend.If you have any questions or wish to discuss your circumstances with a lawyer, please contact the BAL Lawyers Employment Law & Investigations team on 02 6274 0999.

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