Payroll can be complex and detailed and if you have the responsibility of processing payroll, it is inevitable that you’re going to have to deal with an enquiry from an employee about their pay. Some enquiries may be quite routine and easily dealt with, while others can be more complex, so it is important to understand what is involved.
Common payroll issues employees can experience in the workplace include:
- My pay is not right
- I am not getting my payslip
- I should be paid as an employee, not a contractor.
Identify the issue
There are a number of reasons why employees may have issues with their pay. This may be due to a system setup error, legislative changes, employers or employees not following business procedures or just human error.
If an employee contacts you about an issue or concern with their pay, the first thing that you need to do is to understand their concern.
When speaking with an employee about a payroll issue:
- demonstrate you are ready and willing to talk and listen
- be calm and polite, not defensive or aggressive
- ask questions if you need to clarify the employee's concerns
- ask the employee what action they would like you to take to resolve the issue
- ask the employee for copies of any supporting information
- reassure the employee that you take their concerns seriously
- communicate to the employee the next steps and when you will respond.
Keeping accurate payroll records is an important part of any payroll system and will help yo.identify and resolve payroll errors.Some payroll issues once identified can be rectified quickly, for example, additional hours not paid due to a timesheet not being submitted on time or a misunderstanding on how a paid amount has been calculated.
Check the legislation
Some payroll issues may need you to check your rights and responsibilities under the law.
When dealing with these payroll enquiries it is crucial that you have access to a copy and understand the detail of each employee’s employment contract. This includes any award, individual employment agreement or enterprise bargaining agreement (EBA) that applies to your employees. 1If no award or agreement applies to your employees then the National Minimum Wage Order will apply to your employees. A copy of the latest awards are available on the Fair Work Australia website.
The Australian Government have provided a free employment contract tool to help businesses create a basic employment contract that complies with workplace laws. It can be used for full-time, part-time and casual employees to whom a modern award applies and are paid an hourly or weekly wage.
Speak with the employee
Once you understand the problem and have checked your records and current legislation you should organise a time to speak with the employee.
Prepare for this conversation by summarising the key points you want to cover, gathering any supporting documents or information and considering how you could resolve the issue. When discussing payroll issues with an employee you should:
- refer to any discussions you have previously had about the issue
- outline any relevant legislation that relates to the issue
- refer to any relevant supporting documentation
- keep to the facts
- ask the employee how they suggest the issue could be resolved.
After any payroll conversation, you should make notes about the discussion you had and any agreement you have made. The date and time of the meeting and the names of all persons who were present should also be included in the notes.
Fair work has developed a range of resources to assist businesses to resolve workplace issues including Difficult conversations in the workplace - manager course.
Resolve the matter
Depending on the payroll issue the issue may be resolved by:
- providing the employee with an explanation of their entitlements as set out in the award, NES or individual workplace agreement
- back paying any underpaid amounts
- amending the employee's details in the payroll system
- updating the business policies or procedures
- providing additional training to staff
- monitoring future payments to staff to ensure the issue has been resolved.
It is important that issues are addressed in a timely manner. In the case where an employee has been underpaid, take steps to rectify the situation immediately. You should let the employee know in writing, explain the steps that will be taken and make a payment for the deficit as soon as possible.
Make sure you keep a record of all payroll-related conversations, and any payroll adjustments and keep your notes for future reference.
When documenting your adjustment, note that some software allows you to delete employee pays and re-enter them. However, if you’ve already given the employee a pay advice, it would be better to adjust the employee's next pay or process a separate pay adjustment rather than delete the old pay slip.
Seek further assistance
Keep in mind that payroll can be very sensitive and enquiries need to be handled with confidentiality and tact. If you’re not sure what’s the right course of action, always pursue the advice of your manager. You may not have the level of authority needed to respond to some queries and will need to forward them to the right person..
If you come across clauses or conditions in the awards or employment agreement you don’t understand, ask your manager or seek advice from Fair Work Australia. You can also register and submit an enquiry about a payroll problem through fairwork.gov.au/register.
Whenever you are not able to respond to the query.
Following is a short transcript of a conversation between a payroll officer and an employee.
Payroll Officer: 'You have asked to speak with me about your pay. What seems to be the problem?'
Employee: 'There is an error on my payslip. Pay me what you owe me.'
Read the following case study from the Fair Work Ombudsman website.
Example
George owns a clothing store. Judith, the assistant manager, arranges for Jim, a part-time employee, to work extra shifts to cover for a sick colleague. Judith and Jim both forget to write the extra hours onto Jim's timesheet.
Jim checks his pay slip and notices that he wasn't paid for the extra shifts. He is upset about this and sends George a text message saying, "I'm not going to put myself out for you anymore if you're not going to pay me properly".
George doesn't know what the message is about, so he arranges a time to sit down Jim and discuss his concerns.
During their meeting George calmly asks Jim to explain what he meant by the message. Jim explains that he missed attending his nephew's birthday party to cover the extra shifts and feels angry that he wasn't paid for them. George explains that staff are paid based upon the shifts on their timesheet and that no extra shifts had been recorded, but he agrees to look into the issue. George tells Jim he will get back to him by the end of the week.
George talks to Judith and checks the payroll. He sees that Jim wasn't paid for the extra shifts because his extra hours weren't recorded. George contacts Jim to explain what happened. He apologises for the error and organises for Jim to be paid for the extra hours worked. George also reminds Judith and Jim about the importance of accurately recording roster changes and actual work times on employee timesheets.
Because he responded in a timely way, George was able to identify the issue and resolve the matter quickly and efficiently. He also strengthened his relationship with Jim and was able to review his workplace processes to prevent similar issues occurring in the future.
Answer the following questions about the case study.
He arranged a time to sit down with Jim and discuss his concerns. He calmly asked Jim to explain the text message he sent.
George demonstrated he was willing to talk and listen to Jims concerns. George was not aggressive or defensive when discussing the issue.
George spoke to Judith and checked the business payroll records. George contacted Jim to explain what happend, apologised for the error and arranged for Jim to be paid the additional hours. Review and reminded both Jim and Judith of the correct procedure procedure that needs to be followed when staff work additional shifts.
Payroll errors significantly impact employer and employee trust, reduce employee morale, and increase staff turnover. Unfortunately, payroll errors often go unnoticed until they become major discrepancies. There are, however, ways to mitigate the chances of errors occurring within a payroll system. These include:
Know your rights and obligation
Most payroll issues occur because there is a lack of awareness about employee entitlements. This includes knowing the correct award, minimum pay rates, penalty rates and overtime that apply to employees. Ensuring you and your employees are informed about their pay and entitlements helps maintain a 2harmonious work environment with more engaged and productive employees.
Keeping up with payroll legislation changes
Minimum pay rates are reviewed and usually change once a year. It is essential to stay updated with these awards changes. There are several ways you can do this.
- Attend training sessions and seminars. Training sessions and workshops allow you to learn about legislation changes. They also allow you to meet other professionals in the industry who can assist you in understanding the impact of legislative changes on your employees.
- Subscribing to email alerts. The Fair Work Ombudsman email alert system, sends subscribers updates related to payroll legislation. You can also register on the Fair Work Ombudsman’s website for a ‘My account’, an online portal where you can:
- submit an enquiry about a workplace problem
- bookmark, awards and Pay Calculator results
- explore personalised resources such as online training and templates
- get important updates and tailored workplace information.
Join an industry body. Industry bodies like the Australian Bookkeepers Association (ABA) or Institute of Certified Bookkeepers (ICB) provide members with a range of payroll resources, including tools and templates, webinars, training workshops and seminars and a monthly newsletter.
Communicate with employees
3Awards contain standard consultation clauses. These require employers to consult with employees and their representatives if they intend to change an employee’s regular roster or ordinary work hours or make significant changes at the workplace.
The Fair Work Act outlines other situations where an employer must engage with its employees or their representatives. These include:
- when bargaining in good faith in the negotiation of the terms of an enterprise agreement
- where an employee who is entitled to request a flexible working arrangement makes such a request
- when negotiating an individual flexibility arrangement with an employee under an award or enterprise agreement
- when an employee is on parental leave, and the employer makes a decision that will have a significant effect on the employee’s pre-parental leave position
- when an employee requests to extend their parental leave after the initial 12 months.
Good communication practices can help prevent workplace and payroll problems from occurring and resolve issues quickly.
Communicating respectfully is crucial for a healthy work environment and essential when managing payroll. It lets employees know they are valued, and their role is necessary for the business's success.
Respectful conversations
If payroll issues arise in the workplace, having an open and respectful conversation can help resolve the problem.
When having a conversation with an employee, respect is shown by:
- giving the person your attention
- being aware of the other person's needs. Each person has different needs that should be considered and respected
- keeping an open mind. Do not criticise or pass judgment
- offering advice only if it is asked for developing trust.
- Trust is the product of open and honest communications.
- becoming genuinely interested in others.
- All of us have a need to feel important and be understood keeping a sense of humour.
- Do not let little annoyances distract you and smile at every opportunity.6
Fair Work Australia has produced a range of tools on their website to assist businesses to resolve workplace problems by communicating respectfully.
Written communication
On occasions, you will also need to communicate with employees in writing. This may be via internal memos, emails, the business's intranet, or some other method. Transparency and immediate communication on matters affecting an employee's pay is key to maintaining good employee relationships.
Here are some tips to help you when communicating with employees in writing.
- 4Remember your audience. If you send out an email or memo to all employees, you need to keep the language at a level that addresses the employee with the most modest understanding of the situation.
- Be precise and concise in your speech and writing. Don't ramble on to make it seem more important.
- Check your spelling and grammar before distributing. If spelling and grammar are not your long suit, Work has a spelling and grammar check, and programs like Grammarly can be downloaded for free.
- Business emails should always have a formal format, reflecting your professionalism. Do not use shorthand, emoticons, and no slang.
Five ways you can improve your communication
- 5Consider your audience – who are you sending the message to?
- Define the purpose of your message – are you trying to inform, advise, request or obtain information?
- Choose the best method of communicating your message – verbally, non-verbally or in writing
- Consider how the message will be received by your audience and be prepared
- Check to make sure you have included all necessary information.
Payroll Processing Error Memo
On January 10 2022, Lee sent an email to you asking you to increase his salary sacrifice super contributions from $280.00 to $325.00. The request was received after the fortnightly payroll deadline and therefore not actioned for January 15 2022, pay period.
Lee contacted you and asked for a meeting to discuss why the salary sacrifice super contribution amount deducted was incorrect.
At the meeting, you explained the reason for the error. You assured Lee his January 31, 2022, payslip would reflect the correct deduction of $325, plus the $45 catch-up deduction from the January 15 pay period. You also advised him the payroll department is currently reviewing its internal processes to avoid such errors occurring in the future.
Follow up your discussion with Lee by drafting an email that documents your conversation and process for handling the error. The email should be:
- personalised for the audience
- precise and to the point
- free of spelling mistakes and grammatical errors
- written in a formal format reflecting your professionalism. (no shorthand, emoticons, or slang)
When you have completed this task click on the (+) to view a sample response.
Dear Lee,
Please accept my apology for the recent error in your pay dated January 15, 2022, in which the incorrect amount was deducted for your salary sacrifice super contribution. As we discussed earlier, your request to update the amount was received by the payroll department after the fortnightly payroll deadline. As a result, your new deduction of $325 was not reflected in your payslip. Your January 31, 2022 payslip will reflect the correct deduction of $325, plus the $45 catch-up deduction from the January 15 pay period. We are currently reviewing our internal processes to avoid such errors occurring in the future. Please contact me with any additional questions.
Kind regards,
Sam Student (Payroll Officer)
