New workplace legislation to impact HR, payroll systems

The federal government's proposed Industrial Relations legislation is likely to increase the cost and complexity of administration in industries dependent on award payments.

According to Aurion Corporation managing director Silvano Basso a percentage of workplaces will find their current computerized payroll systems are unable to handle the demand, while some employers will make promises beyond their ability to deliver.

Smaller employers are most likely to be using systems that will not cope with extra workloads the new laws will create, he said.

"Many of these systems also have no HR, or limited HR, which is increasingly important for attracting and retaining staff. An application services provider is an attractive alternative as it delivers the benefits of a modern system without the cost," Basso said.

"Companies with multiple employee awards can expect twice that number of payroll variations as an outcome of this legislation. They may need to think about upgrading the hardware that supports their current payroll systems."

Basso cites an HR system for 4000 employees that comfortably handles eight awards. Under the new rules, there may only be three awards, but individual agreements mean that no two employees need be paid exactly the same. Older and less flexible payroll solutions will struggle to implement the new arrangements.

Every time an employee negotiates a different mix of entitlements and benefits, it will involve a payroll data input to make and record changes to tax, superannuation, net salary and benefits.

"The current award structure simplifies administration with common terms of employment such as pay rates and leave entitlements applying to all people doing similar work. But under the new rules, all that simplicity goes out the window and the system, computerized or manual, will need to get it right first time, every time," Basso said.

"In terms of manpower, think of it as a system where two specialist clerks are employed full time to manage a 4000 person automated payroll. Suddenly, you have twice the number of Moves, Additions and Changes (MACs) every week. The system and the staff have to be able to meet the new demands - there is no half-way point."

Basso said although the proposed IR changes may have few immediate effects on the labour market, the long-term impacts need to be understood and planned for.

"I believe that marketplace dynamics will encourage some employers to offer potentially more than their systems can handle.

"Moreover, the changes are coming at a time when employers are under pressure to reduce operating costs. Innovative employers will use the new IR framework to promote themselves as employers of choice by offering greater flexibility in employment conditions to support work/life balance considerations. It's a selling point for an employer in a competitive hiring environment," he said.

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