After the news broke of the potential $300m underpayment by Woolworths, Tracy Angwin talks payroll with ABC breakfast hosts Jacinta Parsons and Sami Shah.
Follow along with the transcription below
Sami Shah
If you look at these stories coming out around payroll audits required by major corporations, you think there’s something wrong. Woolworths is one of the latest ones to join that long list, which does include the ABC as well as having to reconsider how they’ve been auditing salaries and whether or not staff have been underpaid. This joins a whole list of corporations. Is this because payroll is just a complicated beast? Or is there incompetence, maybe even malice at play over here? Tracy Angwin is the CEO of Australia Payroll Association. Good morning, Tracy. How endemic is this issue?
Tracy Angwin
Well, thank you for having me. Look, I think it’s going to get more endemic, before it gets better. We are seeing more of this activity, this self auditing by large employers in particular and in most cases, there will be some form of underpayment, although not necessarily as large as what we saw yesterday. But it’s important to know as well, that in 50% of the audits that we do, we find overpayments as well. So it’s not just the underpayment. There are overpayments as well. So, it is something that is difficult and until employers actually do, invite people in to do a specialist audit, will never really know how big the problem is.
Jacinta Parsons
But this problem, is already as we’ve said, it’s already big. $300 million of money that was owed to staff at Woolworths is just not good enough. We’re hearing it nearly every day that this stuff is being discovered, as Tammy pointed out the top, is it because the system is too complicated?
Tracy Angwin
It’s definitely very complicated. But there’s lots of things in business that are complicated, and I don’t like the excuse that it’s just too complicated because there’s many many employers who are getting it right. The two things that we see that make a huge difference to whether employers can get payroll correct or not, is to have qualified staff. So the people in the office who are actually doing the work, need to have a minimum of this certificate for and payroll administration and only 10% of people working in payrole have that qualification. And the second thing that they do is they have a huge reliance on these systems. So they set up their systems once and they don’t actually check the outputs. They just assume that the system’s getting it right. So obviously, in a case like Woolworths, where you’ve got a problem over and many years over a large employee population, you’re going to get huge numbers like $300 million.
Sami Shah
When someone like, we saw for example, very recently in the press, George Camolbaris was picked for all kinds of payroll issues and in terms of public opinion he was buried quite a bit. Yet somehow all the major corporations seem to be saying, oops, it was a mistake, we just didn’t have the right people in the right places. And other than the payout, which a lot of them can afford, doesn’t seem to be much of a punishment.
Tracy Angwin
Well, that’s an interesting debate. And I think you’re right. I mean, brand damage is huge. When, you know, the last thing that any employer wants to be is on the, you know, the front page of the local media for these types of things. And I think with George Camolbaris that was just really probably unfortunate timing for him. And you know, the sad thing is he actually did the right thing, he self reported, he actually made those payments to his employees, some two years before all the media was reporting on this. So I do actually have some sympathy for him. However, just like any large employer, and you know, you’ve mentioned even the ABC was, was part of this, it’s just really important to not rely on a system, making sure your team are qualified and actually inviting a full compliance audit, which is different to the audits that you might get from a traditional auditor. There’s many more things that make payroll a problem, then, you know, with the controls and tax are being treated correctly.
Jacinta Parsons
At this stage we’re hearing a lot about self reporting. What about if you’re somebody working in a company, maybe it’s big, maybe it’s small, and you have a concern about your payroll? What power do you have to get that investigated? What sort of steps should you be taking?
Tracy Angwin
Well, first thing you should do is go and talk to the Pay office and see if you can get some comfort over whether they have the certain types of controls and training in place that will give you comfort your payroll’s being done correctly. The issue for employees is you know, if an organization like Woolworths can get this right. How is an employee expected to know whether it’s right. It’s really really difficult. If there are concerns and if you don’t feel like your employers’ working with you to do that, you can talk to the regulator. But you can imagine, I think the regulator’s probably getting pretty smashed right now with calls. And that’s a very, it’s a long journey to do that. So I think start with your pay office if you’re not getting any any action via you know, maybe trying to involve HR or whoever payroll reports to, your finance department and just see if you can just get some comfort that they do have the controls in place , they do have a training program for the payroll team that allows the knowledge and the sort of the checking of the outputs of payroll that’s correct, not just relying on the system to sort it out.
Sami Shah
We are speaking with Tracy Angwin CEO of Australia Payroll Association. Woolworths is the latest of many, many companies, corporations, organizations that have been caught under paying staff, up to 6000 staff members are owed almost as much as $300 million by Woolies, and this is an endemic problem. Now, Tracy, you mentioned that a lot of places have started this audit themselves. It’s obviously needed across the board. Any other people are reporting themselves to you already saying we’ve just discovered we also have a problem?
Tracy Angwin
Yeah, absolutely. So we’re working with quite a few employers at the moment to diagnose the root cause of what the payroll problems might be. Every employer is different. I was speaking to a partner at a big four firm the other day and he told me that his team are working on 10 of these major underpayment issues. So, we know that there’s going to be more that will be reporting. But it does take some time. I think it was reported Woolworths have been working with a big four firm, since February. So, can you imagine what their bill is going to look like. It’s a very costly exercise to do this for such a large employer, but we do know I mean in our front it is raining pretty regularly.
Sami Shah
It will still be less than $300 million. Tracy Angwin, CEO of Australia Payroll Association. Thank you so much for your time.
