January 26, 2023

Lakeway Parks

The Smart Business

Underpayment reports in Australia reach an all-time high

Australian employees are already struggling financially due to growing inflation and rising living bills and salary underpayments are making matters worse.

According to new data from global payroll and HR supplier ADP, two out of three workers (64 per cent) still have underpayment difficulties, up from one out of two just a year earlier.

One in nine employees (11 per cent) reported that they are “always” underpaid by their employers, according to ADP’s annual People at Work 2022: A Global Workforce View study of 1,400 Australian employees. This represents a troubling tripling of underpayments just in the past year. 

Additionally, more than half of the workers polled (57 per cent) reported having dealt with additional pay-related problems, such as failed payments or inaccurate tax codes. 

The growing underpayment problem in Australia is made worse by what appears to be a failure on the part of employers to take prompt corrective action. More than half of employees (56 per cent) claim that their employer still needs to address their underpayment problem by the end of the subsequent pay period.

To help manage the complexity of pay, businesses are increasingly turning to integrated technology solutions to essentially ‘outsource’ payroll services. These technology solutions can help businesses pay their employees accurately and on time, while having access to a secure portal to easily manage reporting and compliance.

Additionally, nearly half (49 per cent) of those who are dissatisfied with their current job say it’s because they were given more responsibility without getting paid more, and this number rises to 53 per cent in Asia Pacific compared to 37 per cent in Europe. 

Irina Shainsky, Legal Director ANZ at ADP, said, “At a time when inflation and the cost of living is at an all-time high, more and more Aussie workers are finding it difficult to pay their rent, bills, and basic necessities. 

“It is more important than ever that employees closely review their pay and have conversations with their employers if issues arise. Employers have a responsibility to ensure they have the right systems in place to address payment issues.”

Issues with payments do not only affect employees but have a significant impact on businesses. 

“Incorrect and late payments have the potential to create cash flow and staff retention issues for employers. These can also have knock-on effects on a business’s reputation,” says Ms Shainsky.

“Higher inflation impacts consumers and businesses alike. Organisations are struggling with higher inflation and increased costs across the board. As a global recession looms, their commercial success will depend on their ability to track and review business expenses as early, efficiently and accurately as possible.

“With States starting to legislate against wage theft, the focus has increasingly shifted to businesses’ legal obligations when it comes to correct payments. Employers must be aware of all relevant legislation to ensure they are compliant,” adds Ms Shainsky.

“Employee underpayments have wide ranging implications on the Australian workforce and businesses alike, especially in the current financial climate. It’s imperative that companies source the expertise and tools required to address this issue to ensure their longevity as cash flow and employee retention continue to increase in importance for businesses,” concludes Ms Shainsky.

For more information on ADP’s payroll and HR software solutions, go to au.adp.com.

Keep up to date with our stories on LinkedInTwitterFacebook and Instagram.