With concern about employee underpayments at an all-time high, new data reveals that more than a third (36 per cent) of Australian organisations are not confident that they have identified and corrected all payslip errors. In addition, 12 per cent admit they have identified errors that they have not corrected.
The findings come from a survey of more than 630 payroll managers by the Australian Payroll Association – Australia’s leading network in payroll training, consulting and advisory.
The results also indicated that the greater the employee pool, the more likely the organisation is to make payslip mistakes. Almost two-thirds (63 per cent) of organisations of 5000 or more employees believe they hadn’t spotted and corrected all payroll errors, compared with 27 per cent of businesses with up to 200 employees.
In addition, 30 per cent of organisations admitted to accidentally paying a terminated employee. However, the proportion is a low 10 per cent of businesses with under 200 employees and 25 per cent of those with 200-500 employees, compared with 51 per cent of organisations with 500-5000 employees and 71 per cent of those with 10,000-plus employees.
Employee overpayments vs underpayments
Twenty-eight (28) per cent of organisations believe employee underpayments occur more frequently in their organisation than overpayments – but only by a little more. Twenty-two (22) per cent believe overpayments have occurred more frequently. Twenty-two (22) per cent of payroll managers also admitted that they do not do payroll reports for their CEO or CFO (excluding monthly PAYG).
The findings also indicated that overpayments occur more frequently within big organisations. Just 18 per cent of businesses with less than 500 employees make overpayments more often than underpayments – this compares with 35 per cent of organisations with more than 1000 employees.
Australian Payroll Association CEO Tracy Angwin says: “With the Fair Work Ombudsman frequently cracking down on companies that miss errors in employee payslips, even when these errors are oversights and not deliberate, it’s crucial that organisations do more to rectify these issues.
“One of the biggest ways that organisations can mitigate payroll errors is by ensuring that their staff receive adequate education and training. This will help to minimise the likelihood of other payroll mistakes occurring, such as accidentally paying a terminated employee. Having strong governance and controls also helps organisations de-risk the payroll function by ensuring they have well-documented processes to help staff understand the current legislation, which changes regularly.”
She continues: “The Australian Payroll Association has developed the Certificate IV in Payroll Administration and the Diploma of Payroll Management, Australia’s first recognised payroll qualification, which can assist people working in payroll to get properly trained and qualified.”