Payroll staff burnout worst in large companies

Over half of payroll employees have seen their workload increase since the pandemic and 61 per cent are currently working more than 40 hours a week, according to a survey by the Australian Payroll Association.

The survey indicated that payroll employees working in large companies were the most impacted by increased workload and a lack of support and resources.

Large companies recorded the highest proportion of payroll staff experiencing increased workload at 57 per cent, compared with 43 per cent in small companies and 50 per cent in medium-sized companies.

This group were also the most likely to indicate that their employer had failed to provide the necessary support, training and resources to ensure a fully compliant payroll operation and the respondents most likely to change jobs in the next 12 months.

The survey also revealed that employees at large companies were the most likely to leave their current job in the next 12 months at 28 per cent, compared with 19 per cent in small companies and 26 per cent in medium sized companies.

Payroll people in large companies also had the highest rate of burnout, at 46 per cent, compared with 28 per cent in small companies, and 35 per cent in medium-size companies.

When asked what factors contributed to their burnout, 49 per cent of respondents cited lack of leadership, 40 per cent lack of resources, 39 per cent lack of investment in payroll, and 36 per cent unrealistic deadlines and expectations, the survey results stated.

The Australian Payroll Associated stated that the current situation could leave to a significant exodus of payroll employees from these larger companies, which could lead to higher rates of errors in employee payments and entitlements.

A number of high-profile payroll scandals have already surfaced this year. The University of Technology Sydney last week signed an enforceable undertaking with the Fair Work Ombudsman to back pay staff more than $4.4 million plus superannuation and interest.

UTS became aware that it had been underpaying its employees’ minimum engagement entitlements since 2014 after conducting an internal review of its payroll systems.

Chemist Warehouse is also facing legal action for underpayment of wages, with workers looking to claim $10 million from the company in total.

Payroll Association chief executive Tracy Angwin said the most alarming trend identified in the survey was senior management not understanding the payroll structure required to ensure a well-governed, compliant and efficient payroll.

“The number of senior company executives quietly admitting to us that they have no idea what is going on in their company’s payroll function is astounding,” said Ms Angwin.

“With the increasing wage theft laws coming in and liabilities on executives and company directors, employers cannot just hope that their payroll people get it right, and without any oversight. We find errors in 100 per cent of our payroll audits.”

An increase in underpayments and non-compliance with employee entitlements is almost inevitable unless action is taken, according to the association.

“With companies under greater scrutiny when it comes to meeting their obligations in employee payments, and a lack of compliance potentially leading to significant fines and reputational damage, organisations need to know they can access specialist support to help them avoid a potential crisis through their payroll departments,” she continued.

The survey identified an inefficient use of payroll staff and technology.

“Payroll people are doing things manually that can be automated and that is more costly and comes with higher risk of errors. We also regularly see overpayments,” said Ms Angwin.

“Many payroll teams are overworked because they use poor processes and technology and just don't have the skills and technical knowledge they need. They rely on technology that often hasn't been checked in years, and this technology reliance is the main cause of most of the underpayments published in the news over the past few years.”

Ms Angwin said there needed to be more time spent checking that the payroll is compliant.

In light of the many payroll scandals surfacing recently, Employment Hero chief executive Ben Thompson said businesses were scared to review their payroll processes for fear of encountering a mistake.

“Ignorance is not an excuse when it comes to paying employees correctly though – and regulators won’t show mercy. With three-quarters of businesses getting payroll wrong, the problem goes beyond employers, but if you haven’t already reviewed your current payroll processes – now’s the time to do it,” said the head of the HR software firm.

Mr Thompson said there was a misconception that payroll is easy to manage.

“In reality, it’s a complex system that even large corporations can struggle with.”

“Investing in compliance by outsourcing payroll is a simple way to build trust and gain peace of mind.”

The complexity of the Australian industrial relations system is one of the key issues leading to errors with payroll.

“We have to acknowledge the system is flawed – our employment framework originated in 1907 and it’s one of the most complex in the world. To pay one person, one hour, for one shift, you have to be across all 122 different awards because people cannot be paid one cent less than what they’re owed,” said Mr Thompson.

“If you use the analogy of driving a car: imagine driving for six hours on different types of roads – freeways, highways, residential streets, school zones, no school zones – the speed limit is constantly changing but there’s no signage at all – that’s what it’s like to be an employer in Australia.”