Targeted changes needed for Australia’s complex employment system

The complexity of Australia’s industrial relations laws is leading to inadvertent errors and should be re-examined, says a payroll software provider.

Employment Hero’s Phil Bernie said that with many employers and small businesses, in particular, struggling to stay across all aspects of Australia’s industrial relations laws, the Australian Taxation Office (ATO) and Fair Work Commission should look at how some elements of the system could be simplified.

“A lot of employers are trying to do the right thing, but they’re not experts in this area and some parts can be incredibly complex,” said Mr Bernie.

“Even something like the hospitality award can have 20 or 30 different pay rates across a whole range of roles within that award, and it’s really difficult for employers to be across all those rates.”

On top of the different pay rates for different awards, Mr Bernie said employers also need to be across requirements like single touch payroll and recent changes to superannuation, including payday super and the super stapling reforms that started in late 2021.

“It increases the compliance burden on small business, and often that will show up as errors,” said Mr Bernie in an upcoming Accountants Daily podcast.

“It’s difficult for employers to be on top of all the different changes in the regulations, so I do think it needs to be simplified. The complexity makes it difficult for employers to stay compliant.”

Key areas in need of simplifying

Mr Bernie said there is a strong case for looking at specific areas and making targeted improvements to those areas.

“That could be things like looking at the way overtime is calculated or a creating a simplified set of pay scales,” he said.

“The award system has a lot of benefits, but I think it’s suffered from a lot of bureaucratic interference over time. There are specific areas that could be simplified in a way that is still beneficial for the employee but is a simpler process for the employer.”

“By focusing on those targeted areas, over time that would simplify the system overall.”

The wide range of shift penalties and overtime rates is a particularly complex part of the system.

“There is a whole range of shift penalties across different industries. I understand the historical reason for these shift penalties coming in, but some of these could be rolled into a single rate. There could be a simpler set of penalties,” said Mr Bernie.

Long service leave is another complicated area where a more uniform approach could be applied, he said.

“If anyone in the country is doing long service leave calculations correctly, they’re certainly in the minority,” he stated.

“In my view, long service leave needs to move to a national standard where it’s calculated the same for everyone.”

An employer with three of four employers in different states will be subject to different sets of rules for each state.

“It does seem a little archaic, and so its definitely an area where a unified approach could be taken, and that would also create fairer outcomes for employees across the board,” said Mr Bernie.

“It would also be easier for employers to ensure that they’re compliant.”

This article was originally published on HR Leader’s sister brand Accounting Times.