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Payroll in the last 12 months: wage theft, legislation, natural disasters and global crises

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The last twelve months have been quite eventful across the world and soon we will be seeing the end of another financial year. Regardless of whether you follow the financial or calendar year, however, we can all agree that the past 12 months has been remarkable with all the different events across the globe. Many of these events have impacted payroll significantly, requiring organisations to adjust their processes.

Let’s take a look at some of these notable events that affected payroll in the last 12 months:

Wage Theft and Underpayment

No sooner than the start of FY20 did the news of George Calombaris underpaying his staff nearly $8M broke the internet, leading to more investigations that exposed millions in underpayments by other big brands. In the inaugural Ascender Employee Pay Survey conducted in late 2018, we found that underpayment is pretty common in Australia, with 1 in 5 Australians underpaid in the past year, and on average, received 18% less pay than what they were owed and incorrectly paid three times in the same year.

Getting pay right is fundamental in any country, and we do not need to have underpayment issues rise for us to know or enforce that. If anything, these issues in the past year opened up the discussions on how leaders need to give more focus on payroll departments and provide necessary support wherever possible, whether through additional people, a new payroll software, or payroll outsourcing.

Legislation Impact

Statutory and legislative changes have driven policies around payroll in the past year, as the previous years have done. Some of the legislation updates we have seen in the past year are:

Australia: Annualised salary changes

On March 2020, the Fairwork Commission introduced changes to annualised salaries, affecting over 22 modern awards including the Clerks Private Sector Award 2010. With this update, employers are required to provide written notice of employees’ annualised salary and maximum ordinary hours, with overtime applied to hours worked above the 38-hour workweek if overtime is not part of salary contract. This update makes getting pay right even more complicated for employers in 2020.

Singapore: Increase to CPF contributions for senior workers

The Singapore government introduced a gradual increase to the Central Provident Fund (CPF) contributions for workers between the ages of 55 and 70, with a target to implement the final rates by 2030. The first increase has been deferred to 2022, however, to help employers manage costs amid the COVID-19 pandemic.

China: Income tax system overhaul

In 2018, the Chinese parliament introduced amendments to China’s Individual Income Tax (IIT) Law and was implemented in 2019. The new law initiated a major overhaul that included more significant tax relief for low and middle-income earners, more benefits from for all individual taxpayers, and substantial changes to collection and administration.

Malaysia: Minimum Wages Order 2020

On 1 February 2020, Malaysian workers saw an increase in the minimum wage for major towns under 56 city and municipal councils in Malaysia. Also, the government increased the maternity leave, and overtime pay is now applicable for workers earning less than 4000 ringgits per year.

New Zealand: Holiday Act of 2003 Remediation

While the NZ Holiday Act has been around since 2003, audits conducted in the past years have shown non-compliance and millions of employees not receiving the right holiday pay. As the government continue to investigate the full extent of this non-compliance, businesses affected by these Holiday Act issues are working to issue remediation payments to their employees.

While the legislative environments across the Asia Pacific countries are very diverse, these government interventions protect employees and ensure they get a fair wage. Compliance to these will also protect employers and avoid similar scandals as discussed earlier, as well as any additional costs and reputational damage that audit findings may leave.

Natural Disasters and COVID-19 Health Crisis

The Asia Pacific region is not a stranger to natural disasters, and countries are regularly exposed to earthquakes, tsunamis, tropical storms and volcanic eruptions –just to name a few—which affect millions of people every year. The first half of FY20 alone has seen 27 weather systems, 16 of them declared as typhoons that affected multiple countries in Asia. From September 2019 to February 2020, Australians saw a devastating fire season that burnt about 191,000 hectares of land over 79 days, causing extensive damage to the environment, homes and businesses.

It’s impossible to review 2020 without mentioning Coronavirus – the biggest crisis that has affected businesses all over the world. Whilst COVID-19 cases rose in countries across the region, and governments quickly introduced measures to support employers and employees through temporary subsidies like the Jobkeeper in Australia, Economic Response packages in New Zealand, One-off Cash Assistance in Malaysia and the Job Support Scheme in Singapore. Other measures to ease obligations for companies were implemented as well, such as extending deadlines for filing of taxes in Japan, Philippines, Taiwan and Thailand, and the suspension or deferral of contributions in Vietnam and Singapore.

In times of uncertainty brought about by natural disasters and a global pandemic, payroll plays a significant role in the wellbeing of people. Payroll teams are integral in getting all the government’s financial support out to employees quickly, and this is on top of making sure the pay gets out the door accurately and on time every month. Getting the pay right is not an easy feat anywhere, and this is why payroll teams deserve the praise, including from Australian Prime Minister Scott Morrison for being the unsung heroes in any crisis.

FY20 has indeed been a rollercoaster, but everything in the past 12 months has just proven how crucial payroll is to any business, and not giving it enough support and attention is pretty detrimental to the whole organisation. It is not only because employees need to get paid, but because payroll is a starting point to many things: wellness and prosperity, engagement and performance, to business stability and positive reputation.

We do not know what FY21 will bring. We all continue to hope for the best and hope that in the coming year, payroll will have a more prominent place at the table and be used to guide organisations in the way forward.

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