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Understanding your payroll obligations

10 October 2022

On 8 August 2022, the Fair Work Ombudsman (FWO) announced that it recovered $532 million in unpaid wages for over 384,000 workers in 2021-22.


This was more than three times the amount recovered by the FWO in the previous year, meaning that more employers and workers are becoming affected by wage underpayments.

With myriad modern awards, enterprise agreements and legislative requirements to consider, plus the potential to succumb to confusion or complacency, it is no wonder businesses struggle to ensure compliance with their payment obligations.

It is important that employers complete regular internal workplace audits to remain compliant with employment laws and regulations.

Non-compliance with the Fair Work Act 2009 or other industrial instruments can result in serious infringements and penalties, not to mention the potential reputational and cultural damage to your business.

Our Workplace Relations Advice Line can provide current and accurate information and support. Four tips to help employers include:

#1: Understand your obligations as an employer

Employers are responsible for ensuring they have the right tools and systems in place to ensure compliance with workplace rules and regulations and avoid significant penalties. It is essential that employers keep abreast of key obligations and responsibilities, such as:

  • Ensuring minimum employment conditions – including National Employment Standards (NES), and entitlements under employment contracts, Modern Awards and/or enterprise agreements
  • Educating employees to understand their workplace responsibilities – including health and safety of themselves and others, as well as appropriate workplace behaviours
  • Having measures in place to identify, assess and control workplace health and safety risks.

#2: Review workplace procedures and policies

Employers must ensure their procedures and policies are current and align with relevant legislation and guidelines. Up-to-date policies and procedures ensure employees have a thorough understanding of their entitlements, legal obligations and the employer’s expectations.

#3: Review workplace payroll systems

Employers should implement and maintain the appropriate tools, systems, and resources to ensure payroll compliance. Payroll systems which are easy to use with documented and clear processes can reduce errors in calculating pay. At a minimum, payroll teams should be able to accurately calculate:

  • Base rate of pay
  • PAYG tax instalments
  • Superannuation
  • Loadings
  • Weekend, weeknights and public holiday penalties
  • Allowances
  • Overtime rates.

#4: Understand your recordkeeping obligations

Section 535 of the Fair Work Act 2009 states that employers must keep certain employee records for seven years. Failure to comply with the requirements under s535 and the Fair Work Regulations 2009 could result in a breach of the Act and costly penalties. Employee records include:

  • General records such as name, employment type and start of employment
  • Records of all payments
  • Hours worked
  • Leave entitlements
  • Superannuation contributions
  • Individual flexibility arrangements
  • Termination of employment.

Members can access our record keeping fact sheet for further detail.

How we can help

It is important for businesses to understand their workplace obligations to ensure they are compliant. Our experienced consultants at the Victorian Chamber can support businesses by conducting an audit of your policies, procedures, wage audits and record keeping obligations.

To access our consulting services please call the Victorian Chamber Workplace Relations Advice Line on 8662 5222. The Workplace Relations Advice Line offers general advice on a range of workplace issues, including:

  • Award interpretation, classification and minimum entitlements
  • Policy review
  • Disciplinary processes, performance management and termination
  • Personal illness and injury
  • Parental leave and flexible working arrangements
  • Redundancy
  • Occupational Health and Safety and WorkCover.

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