Can a computer glitch cost you big time?

Every business owner makes mistakes sometimes. But some errors are more expensive than others, particularly when they involve underpaying staff.

A New South Wales manufacturing business learned this lesson the hard way. It’s now $45,000 out of pocket after uncovering a computer error that accidentally short-changed employees for eight years.

A costly error

The payroll mistake was only revealed earlier this year. A worker’s wife contacted the Fair Work Ombudsman, tired of her husband complaining about pay and leave entitlements. She asked Fair Work inspectors to investigate.

The inspectors discovered that the business’ wages system was set up incorrectly back in 2007. It had miscalculated leave and superannuation entitlements ever since.

Almost 1,100 hours of annual leave and 1,300 hours of sick leave went unrecorded, affecting 25 employees. One unlucky worker missed out on almost a year’s worth of annual leave.

The business was quick to reimburse its workers once it learned of Fair Work’s findings. That’s great for affected employees. It’s not so great for the business owners, who had to come up with $45,000 at short notice.

Could this have been prevented?

Most organisations do their best to comply with workplace obligations. But no matter how well you understand awards and entitlements, it can take a long time to find and fix an error.

While it’s unclear if the business knew of the system glitch before Fair Work’s investigation, it was likely an honest mistake. It’s also a mistake that any small business could make — and not just because of computer errors.

How to keep your payroll systems compliant

Australia’s complicated award conditions mean even the most diligent employers can struggle with compliance. And with pay rates changing all the time, it’s no surprise many business owners find it difficult to keep up.

This is where another set of trained eyes can help. At easyEMPLOYER, we offer award management services that ensure that your payroll processes are accurate.

These services include checking current awards and pay rate applications, as well as automatically updating payroll systems when legislation changes. Any payroll errors are quickly identified, giving you an opportunity to resolve issues before they add up to tens of thousands of dollars — or more.