Underpayment could cost Aussies almost $1.8 billion per year.
One in five Australians underpaid and paid late in last year.
Research from leading human resource and payroll software and services provider, Ascender, suggests over one in five (22 per cent) Australians were underpaid. Indeed, on average, Australians were paid 18 per cent less when they were underpaid. They were also incorrectly paid three times a year, on average. This is potentially costing employees almost $1.8 billion in lost wages per year.
The research findings highlight the need for greater accuracy in employee pay, particularly for shorter pay cycles. According to the research, the longer the pay cycle the less likely you’ll be underpaid, with the likelihood of underpayment in monthly (18 per cent), fortnightly (20 per cent) and weekly (28 per cent) wages increasing as timescales get shorter.
It’s not just underpayment that is an issue in Australia. Over one in five (22 per cent) employees are paid late an average of three times a year, putting employees under financial stress. Making matters worse, one in seven (14 per cent) employees cannot check if their pay is correct, as they do not receive a payslip from their employer. Not only is this unlawful but can lead to fines for employers.
Inna Wahlberg, general manager at Ascender, believes Australian companies need to ensure they get pay right and utilise available payroll technologies if they want to improve the employee experience.
“Understandably, employees care about their pay,” said Wahlberg. “It’s important as an employer to get this right, as it can negatively impact your workforce and have a significant impact on a business’s bottom line. Not only can incorrect pay impact the productivity and ‘care-factor’ of your workforce, but it can also lead to significant fines and reputational damage for businesses.
“Most businesses are not doing this on purpose,” she adds, “with many of these errors being caused by accident or having outdated information in their systems. Automation and smart payroll software can eliminate these errors, ensuring employees are paid on time and accurately.”
New payroll technology is helping to reduce, if not eliminate, these issues. Advancements in payroll automation reduce manual and time-consuming tasks, such as data-entry, eliminating the risk of errors. It also ensures pay information is kept up to date and compliant with the latest awards and regulations.
By utilising payroll automation or outsourcing payroll, payroll and HR teams can focus on innovation and providing remuneration packages that exceed employee expectations and drive engagement.
With just over half (55 per cent) of Australians expecting a wage increase over the next 12 months, employers need to find alternative ways to attract and retain top talent while managing the financial impact on their business. Ms. Wahlberg believes employers have an opportunity to be creative and offer employees perks that help alleviate lifestyle challenges, such as company cars, flexible working hours, gym memberships and more.
“According to our research, less than a quarter (24 per cent) of companies currently offer additional perks beyond wages to employees. With wages stagnating across Australia, there is an opportunity for employers to create packages to delight their employees,” she said.
“It’s important as an employer to recognise what motivates an employee’s success and provide incentive whether that is in the form of pay increases, flexible working, personalised perks or same-day pay. Automating payroll will give your team more time to engage with employees, ultimately helping to personalise payroll and unlock the full potential of your workforce.”