Even an extra 20c an hour can cost your organisation thousands each year in unnecessary payroll expenses if not careful. The most common payroll management mistakes are outlined in this article to help you protect your business.
Someone else creates new employee records
Ensure that the payroll person is not the same person who creates the new records for employees. This way the payroll person cannot create a fake employee to get paid each week. By ensuring that the manager creates the record it also helps the manager keep an eye on the system and make sure your software skills are current.
Watch the pennies, to save the pounds
When setting up the allowances check that all the entered data is accurate to the decimal point. A single mistake between cents and dollars will quickly add up.
Checking the data before entry and after entry will help save you time later when you try and find where the payroll mistake is.
Develop a rounding off policy to enter the right amount whenever penalty rates and allowances are calculated.
Timesheets need to measure 15 minute blocks
When employees fill out their weekly timesheets it can be hard to decipher the numbers and increase the risk of errors. Create the timesheet to enable your record keeping to be more accurate at the start.
Include the following;
Use a 24 hour time reporting system to prevent mistakes with a 5pm start being entered as a 5am start. This difference will change the ordinary pay rate to a penalty rate of pay.
Instruct all employees to record time to the nearest 15 minute period not round up to the nearest hour or half hour. It doesn’t like much but every free thirty minutes they get is profit that you have lost.
The employee signs after each daily hours entry to minimise the chance of fraud and enables the organisation to take legal action if necessary
Check the Award entitlements every year
Since the fines for underpaying employees can be $33,000 per breach it is important that you review and check that all pay rates, allowances and overtime rates meet the latest legal requirements.
For example, just this week all employees on Modern Awards got an automatic payrise of 2.9%. This means that your payroll needs to be adjusted to meet this legal obligation.
It doesn’t sound like much, but if you fail to do this adjustment and your employee reports you for underpayment it will trigger the workplace auditor to formally request your time and wages record for that employee.
There is no avoiding paying the right amount as employees in Australia have up to 6 years to claim back payments of underpayment.
Information supplied by Paul Baker
Over twenty years of business development & change management strategies successfully used in National organisations across Australia. The focus is on continuous improvement of business systems to stimulate growth through our principles of Initiate, Inspire, Innovate.