Pitcher Partners warns against automated payroll compliance tools
Companies that rely on automated payroll compliance tools could be exposed to legal and reputational risks, the firm has warned.
New laws that criminalise wage theft, effective from 1 January 2025, have boosted the uptake of payroll compliance software as businesses seek to reduce their administrative burdens and avoid errors.
Pitcher Partners has warned that automated payroll software cannot entirely replace in-depth expert reviews, which take into account the context and workforce management processes of an individual business.
“Off-the-shelf software offers businesses ‘plug and play’ solutions, which can help to ease some of the concerns for business leaders,” it explained.
“However, most off-the-shelf software offers broad analysis, and cannot be tailored to more complicated compliance needs, which can lead to concerns down the track.”
The Fair Work Ombudsman said honest mistakes would not be criminalised under the new legislation. However, businesses have nonetheless taken the opportunity to ensure their payroll processes are compliant with the law, with many investing more in payroll software.
Automatic payroll processes are also gaining popularity as payday super laws loom, which have aimed to crack down on super underpayment.
When deciding whether to use automated payroll software or invest in expert advice, Pitcher Partners urged firms to consider their situation and weigh the pros and cons of each option.
While they are generally more convenient, automated tools can struggle to account for industry-specific workforce management processes, including pay cycles and rostering processes, Pitcher Partners noted. Furthermore, its payroll compliance data can come from multiple sources and systems, meaning the datasets can be incomplete or of poor quality.
In contrast, expert advice would deliver a more holistic approach to payroll compliance, taking into account an individual businesses’ rostering process, pay cycles, systems and workforce management processes, Pitcher Partners said.
“Not only does it offer more tailored analysis, but a deep dive into payroll processes also means concerns can be identified quickly and addressed before major ramifications arise,” Pitcher Partners said.
“With the potential for large fines and criminal charges now on the cards, businesses with complex compliance obligations would benefit from engaging in an in-depth payroll compliance review.”
Businesses that fail to comply with incoming closing loopholes legislation could find themselves facing legal and reputational risks, the legal firm warned.
“While pre-built automated tools may be suitable in some circumstances, an in-depth review from an expert can offer more sophisticated analysis, ensuring you get your compliance obligations right and avoid any legal and reputational risks in the process,” it said.
