5 key themes from the AICD Australian Governance Summit Breakfast

Last month Yellow Canary sponsored the AICD’s Australian Governance Summit breakfast in Melbourne. Here are five key themes that the panel of experts discussed and why business leaders should be taking note.

Cross-functional collaboration - with a key owner responsible for payroll compliance - is essential for success

Often in medium to large businesses, payroll compliance sits at the intersection of several different business functions. Payroll can be the responsibility of the CFO, HR, or sit out on an island of its own. For this reason, one of the most effective actions business leaders can take is to facilitate dialogue among executives in these roles.

Before we commence any payroll review at Yellow Canary, we start by getting everybody together in one room. It’s not uncommon for payroll staff to introduce themselves to in-house legal counsel for the very first time during these sessions, despite their pivotal role in interpreting legislative frameworks. To maximise effectiveness and reduce the incidence of errors, facilitating ongoing communication among relevant stakeholders is key.

As responsibilities are often dispersed across payroll, workforce planning, legal, and technology teams, determining ultimate accountability for payroll compliance is a common challenge for many companies, often leading to a lack of clarity. Directors should delegate a key owner within C-suite or management to own payroll compliance responsibility. This designated individual serves as the primary authority, promoting accountability across the organisation, and regularly updating the board for continuous oversight.  

Also, it’s essential to acknowledge that effective assessment hinges on visibility. In the payroll space, businesses often have data sitting in multiple different systems. Wherever possible, having this information available and visible in real time is beneficial to top level decision-makers.  

Underpayments may grab the headlines, but overpayments are an issue too

Overpayments, though generally less discussed, are also important for organisations to monitor. They can occur in a variety of ways. Take, for example, the aged care sector, where it can be difficult to find employees who are willing to work in roles at award minimums. To address this issue, businesses might opt to offer an additional $2 per hour.

However, this approach introduces a shortcut that compounds systemic complexity, as it may not be sufficient, or it may be too much. The key to avoiding overpayments is to ensure corners aren’t cut and that workforces are remunerated in a way that always prioritises compliance.  

The next big area of non-compliance is long service leave  

Amidst the ongoing discourse surrounding payroll underpayments and wage theft in the media, one area of compliance that has received minimal attention is long service leave, which will undoubtedly be the next focus of enforcement action.

Archaic as it might seem, the varying LSL regulations across states stem from a historical practice. These regulations were originally determined by estimating the time it would take civil servants to return to England by ship after completing 10 years of service in their respective states.

Today, compliance relies upon interactions between industrial instruments (awards and EAs), the National Employment Standards (NES), and state-based legislation, causing complexities for organisations. For businesses that have yet to look closely at their employees’ long service leave entitlements, the time to do so is now.

Don’t underestimate the time it takes to audit your payroll properly

Considerable upfront preparation is essential when embarking on a payroll review or audit, and executives must recognise that this is a time-consuming process. Policy assumptions and policy positions need to be understood and firmly established as quickly as possible. Without this key step, audits have the potential to drag on in perpetuity.  

That’s why assembling all key stakeholders from the outset is imperative. The key factor that can turn an audit from lasting six months to stretching over three years is having the right people with institutional knowledge on hand, seconded to the audit team.

Start small and simple with your payroll compliance audit

Undertaking a comprehensive payroll audit may seem daunting, but it's important to adopt the right mindset. Attempting to address everything at once inevitably leads to overwhelm, stifling organisational momentum.

A successful payroll audit starts with the ‘one percenters’. For those tasked with instituting an audit, consider if there are one or two initiatives that you can get going in the first few weeks. Identifying quick wins that your management teams can focus on will help you gain traction, which is key to long term success.

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Yellow Canary provides insights into an organisation's compliance status, equipping boards with the data and visibility necessary to evaluate whether employees are receiving compensation aligned with modern awards, industrial instruments, and EAs.