How outsourcing your payroll will save you in wages and legal fees

If you follow the news within Australia, you’ve undoubtedly heard the stories of businesses underpaying their staff. Sometimes, this underpayment is a chronic, ongoing issue within a business’s payroll, leading to years and years of unpaid wages.

Some recent examples include;

Woolworths. Late last year Woolworths came under investigation after they found the retailer had underpaid 5,700 people over a decade. Once again, an error in award was identified as the cause of underpayment, and it will set the retail giant back by $300 million.
7-Eleven stores have paid back more than $173 million to staff and made more than $10 million worth of improvements five years after an investigation began into underpayment of wages at the company.
Michael Hill Jewellers. Over six financial years, the jewellery chain was underpaying staff due to an error in the application of the award rate. They owe their employees across 300 stores, approximately $25 million.
George Calombaris’ MAdE establishment. Masterchef judge, George Calombaris, was last year caught out with having underpaid staff from 2011-2017. The business failed to pay employees penalty rates and the correct award rates, and the consequences affected primarily casual employees. He has to repay $7.8 million in unpaid wages.

An experienced outsourced payroll provider who knows your industry is likely to improve your overall compliance and in time, minimise legal exposure. Many providers offer pro-active alerts relating to payroll and compliance changes in your sector, supplying expert advice on how best to apply them to your business. Whilst most payroll services will not claim to achieve one hundred percent industry compliance, use of an experienced payroll provider will significantly reduce your legal exposure relating to claims of underpayment or miscalculated payslips.

However, not all errors relating to payroll involve the underpayment of wages as above. Use of an effective outsourced payroll service can dramatically reduce the cost of raw wages. Often times, in-house payroll staff simply do not have the tools in-hand to accurately calculate the finer details of penalties, overtime, superannuation and leave accrual. Credible outsourced payroll providers typically employ more powerful software systems, providing more accurate and consistent payroll calculations that in many cases will result in a reduction of wages paid. Australia’s industrial relation landscape is complex and in some cases require sophisticated payroll calculations that may be unnecessarily adding to your wages bill.

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The final and perhaps more tangible outcome of using an outsourced payroll service, is the reduction in costs relating to your payroll team. Whilst you will not be able to eliminate the need for human effort entirely, demands on human resourcing for your payroll team will likely fall dramatically, slashing your wages bill. As an added bonus, many service providers often supply software tools for rostering and attendance that will further enhance other areas of your business and streamline the process of data collection.

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