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ACTU double-leave-half-pay reform will stress payroll accounting

22 April 2024
actu double leave half pay reform will stress payroll accounting

Payroll expert warns accountants will be exposed to additional financial and legal risk should the FWC accede to the ACTU’s double-leave-half-pay reform.

Should the Fair Work Commission agree to the ACTU’s recent lobbying, workers will have a right to take double their annual leave at half the pay.

The peak body is “nearing an agreement” with employer groups on the reforms which would expose payroll accountants and their clients to greater legal and financial risk, said Matt Loop, VP and Head of Asia, Rippling.

The risk of falling foul of Australia’s beefed-up industrial relations policy would only increase under the added payroll challenges likely to result from the holiday reform.


While double-leave-for-half-pay is already a reality for many workers, the changes sought by the ACTU would make the right applicable to all awards.

“Managing these new changes will require modification to how holiday pay is accrued, calculated, and reported. Accounting teams will need to track split rates of pay within the same pay period, ensuring that all entitlements are correctly calculated so that employees receive the correct pay,” said Loop.

“This demands both precision and flexibility in payroll processing software, which will be a significant adjustment for many accounting firms and the businesses they support.”

Failure to comply with the proposed changes could expose accountants, and their clients, to a range of legal and financial consequences, he said.

ACTU secretary Sally McManus told the ABC’s Sarah McDonald that employers had “come 90 per cent of the way” in agreeing to the changes.

The remaining disagreement is over the scope of the employer’s right to refuse an application for the longer leave, with employers advocating for a blanket right to refuse.

Under the ACTU’s proposal, employers would retain a right to decline an application from an employee, however, only in circumstances where there are reasonable business grounds.

“Really what we want is to protect people from capriciousness ... But if there’s a good business reason, for instance, you only have a few staff that cannot cover that time, then that would be a fair business reason,” said McManus.

“I think it will be something that people would use…when they really need this leave,” she said.

“For those reasons, it’s also good for employers because you’re going to keep those employees and it doesn’t cost you anything.

She added the use of the right, if passed, would not be “widespread” since many Australians would be reluctant to cut their pay in half for an extended period.

Loop said the new criminal offence of wage theft and other industrial relations reforms under the Closing Loopholes package were already adding stress to payroll functions.

While that offence is reserved for extreme cases of underpayment, Loop said it “places a significant burden on HR and payroll teams.”

More than half (52 per cent) of payroll managers contacted in a recent Rippling survey said they believed the Closing Loopholes reforms would add more complexity and stress to payroll.

The 54 per cent who said they were forced to reassess their payroll management following the Closing Loopholes reform might be required to once again lift the hood on their processes.

Loop said non-compliance in payroll accounting often results in reputational damage beyond the financial and legal consequences.

“It can affect employee trust and satisfaction within the workplace, potentially leading to higher turnover,” he said.

“Additionally, incorrect pay calculations could result in costly retroactive corrections and even legal challenges from employees, which could further strain a company’s financial resources and reputation.”

Despite the growth of digital payroll solutions, payroll accounting has only gotten more complex in recent years.

“The rapid evolution of workplace regulations, the introduction of new technologies, and the need for data security and privacy are just a few of the challenges payroll experts now face,” said Loop.

“This complexity requires a greater depth of knowledge and adaptability than ever before, which underscores the importance of continuous professional development and technology adoption.”


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