Oops! Payroll mistakes leave public service red faced

Under-investment in training for payroll professionals is wreaking havoc in the public service, with Canberra’s Prime Minister and cabinet (PM&C) department forced to repay former staff members whose redundancies were underpaid – in one case, by $17,000.

The department has apologised for the errors and intends to repay those whose payments were incorrectly calculated, The Canberra Times reported.

Susan O’Neil, director of White Pillar Payroll and HR Solutions, said the company had checked 10 recent redundancy payouts from various departments, including the PM&C, and none of them were calculated correctly.

One of her clients was underpaid by $17,000 because his agreement to waive his right to a redeployment period was overlooked.

O’Neil told HC that many organisations underestimated the skills required for payroll.

“They assume you can pick up an admin person or a junior and get them to do payroll. These people don’t know what the legislation is and the rules are that apply and so they’re just making mistakes.”

She said that organisations needed to invest in training payroll staff. This is particularly important in complex payroll environments such as many government departments that have undergone significant change. Not helping matters, O'Neil added, is the fact that the APS Payroll Operations Program (POP) is now defunct. The POP previously assisted payroll specialists to develop their skills.

White Pillar payroll manager Angie Cook said that many organisations wanted payroll staff with experience in their particular payroll software, rather than employees with the skills to go back to basics and make manual changes if required.

“Our experience is that you don’t need to be a specialist in the software, you need to be able to access the data and check the data, but any junior can help you with that,” said O’Neil.

“What you actually need is a specialist who understands the legislation and can check the agreement to make sure the calculations are being done appropriately.”

O’Neil said that when dealing with redundancy payments, employers should make sure that if they were providing an employee with an estimate, that it was made clear and stated in documentation that it was not a “fixed quote”.

Organisations also needed to follow the correct processes and have calculations checked before being signed off.

“Some of the documents we’ve seen, they’re rushing so much that they’re not getting that done.”

She said that along with underpayment, the organisation had seen incorrect interpretation of agreements and incorrect taxation rates and tables being applied which could lead to former employees ending up with unexpectedly large tax bills at the end of the financial year.

“In times of redundancy, my experience is that employees are quite stressed. I spent a number of years downsizing as a manager in Telstra so I’ve retrenched a fair number of people and I’ve learned that you make it about the employee and their transition.

“They may not be happy that they’re exiting, but at least the way that you do it, in a respectful and courteous manner, helping them focus on the future and what their new opportunities are, stands you in good stead and keeps your corporate reputation up and helps that individual make good choices.”