Payroll Compliance Series Part 1 - Comprehensive Time and Scope

The Fair Work Ombudsmen (FWO) recently outlined eight elements for payroll remediation success. These elements provide organisations with clear guidance as to the FWO's expectations of employers when undertaking payroll remediation programs. Let's dive in and unpack the first expectation - development of a comprehensive timeline and scope.

Remediation Scope Considerations

It is important to develop the artifacts typically required to effectively manage any program of work. Comprehensive project planning includes the development of a project plan detailing key activities, responsibilities, scope, timeline and the identification of the critical path. The project plan should be supplemented with a risk and issue log and regular reporting to an appointed Steering Committee, the Executive Group and Board.

Payroll remediation programs are different beasts. They often start with a contained number of payment issues and can grow quickly as additional payroll issues and risks are discovered whilst remediating the known issues. It is important that flexible funding is made available to allow for effective remediation of all payroll issues as they are identified. Program governance processes must also be flexible to support scope increases quickly without being held up by cumbersome change request processes or business case revisions (yes, some organisations have developed business cases to support their payroll remediation programs!)

For example, on a recent program Impact HRT supported, some casuals were not being paid overtime per the organisation's Enterprise Agreement. As the project prepared to calculate the backpayments it was discovered that an overtime meal allowance was not being paid compliantly. The meal allowance calculations were brought into scope, reported proactively to the FWO and budget provided to support the end to end remediation including process redesign, governance support and communications (more on this in Part 5 - Implement full, integrated corrective actions).

Preparing payroll remediation limited to “targeted” or “sampled” reviews is considered by the FWO (unless the decision is explainable) to be an indicator of poor remediation program design. For example, if a particular allowance is only applicable to a certain type of employee, and/or or not relevant to employees of specific classifications, there is no need to include those employees in any review. However, any gaps will be challenged and tested by the FWO, so if in doubt, seek external legal advice.

Remediation Timeline Considerations

The program should consider the maximum period that the relevant payroll data and records allow - not just the statutory limitation period (six years). For example, if relevant payroll data and records exist dating back seven years the FWO expects the payroll calculations to take that full period into account. Calculating back payments to the statutory 6-year period in the instance would result in follow-up and a please explain from the FWO.

Executive expectations should also be managed regarding the duration of payroll compliance programs. Many executives expect programs to remediate and fix all payroll issues within a 6 to 12-month timeframe - the reality is very different. The FWO recently addressed this issue, stating that large compliance programs typically take 2 to 3 years to complete.

Irrespective of the duration of any payroll remediation program, it is important to develop detailed documentation to support the program and ensure both the timeline and scope supports the effective remediation of all payroll issues. Sharing your time and scope documentation with the FWO (either proactively or on request), where prepared well, will set the tone for your relationship with the FWO and ongoing remediation success.

We are happy to have a confidential discussion on any aspect of your payroll compliance program - we can be contacted via the links below.

Contact us: info@impacthrt.com.au

The information provided in this article is general in nature and should not be relied upon for any specific or individual scenario. Always seek qualified assistance in navigating employment and labor law.