Five questions directors should ask about payroll compliance

Wednesday, 01 May 2024


    Industrial relations laws have undergone a substantial shift, requiring directors to proactively mitigate underpayment risk. 

    Presented by Yellow Canary

    Boards play a key oversight role when it comes to payroll compliance, particularly in relation to mitigating the risk of underpayments.

    The following five questions — intended for board members to pose to management — serve as an immediate action that directors can take to assess their company’s compliance risk.

    1. Who is responsible for payroll compliance?

    Although day-to-day payroll compliance management is conducted well below the board level, ultimate accountability rests with the board.

    It’s essential for directors to delegate a key owner within C-suite or management to own payroll compliance responsibility. This individual is the primary authority, promoting accountability across the organisation and regularly updating the board for continuous oversight.

    2. Are payroll processes compliant?

    Boards should work with management to establish adequate risk-mitigation protocols. Despite the best efforts of their clients, Yellow Canary consistently discovers underpayments in payroll, typically ranging between one and three per cent of total headcount.

    This seemingly small percentage can snowball into significant financial implications.

    3. What processes and procedures safeguard compliance?

    High-risk indicators include sole reliance on payroll systems, manual processes that are prone to error and lack of integration with legal or workforce planning teams.

    Low-risk indicators include well- documented processes, legal advice integration and regular technology-based payroll audits.

    4. What systems support board oversight?

    As compliance obligations grow, technology becomes essential to provide the board with necessary visibility. Advanced solutions like Yellow Canary’s platform offer concise reporting, allowing directors to maintain understanding without interfering at an operational level.

    5. Is there a compliance culture?

    Instilling a compliance culture is key to mitigating compliance risks throughout all levels of an organisation and navigating regulatory complexities. This culture starts with active board engagement and support, and permeates through the organisation. Integrating compliance objectives into the company’s ethos, and leveraging technology, effectively signals and reinforces this culture.

    Providing comprehensive insights into an organisation’s compliance status, Yellow Canary gives boards peace of mind that employees are being paid in accordance with modern awards, industrial instruments and enterprise agreements.

    To learn more about payroll compliance, contact Yellow Canary here


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