Pay attention to payroll
Boom time payroll costing local business thousands and encouraging labour hire.
Wednesday 30 March 2016
Mackay based workplace consultant Craig Joy, says local business is losing thousands of dollars, and missing out on contracts because they have failed to re-adjust their payroll systems in the wake of the mining boom.
In one classic example, he said a client's failure to make sure their payroll systems were in order, had cost them nearly $200,000 and made their attempts to lodge competitive tender applications impossible.
“In this particular incident, one of our larger clients was paying superannuation on total earnings, rather than on base rate earnings - which is what the law requires,” he told Shift Miner.
“In mining, the difference between these two figures can be enormous, when you have a range of roster and shift loadings that are specific to different sites and jobs.
“So not only were they paying far more super than they were legally required to, the cost was compounded because the figure was also used to calculate payroll tax and workcover.
“When they sorted these issues out, they found they could slash $180,000 off their quote without any impact on their margin, which would have put them right back in the game for securing that tender.”
Another major area of confusion he said was the coal mining portable long service leave fund. The fund is like the portable long service leave entitlements that accrue in the construction sector, except that instead of being half a percent on top of wages it is nearly three percent.
“One of our clients in Mackay got told by one of their employees that they had to contribute an extra 2.7% to the black coal long service leave fund,” Mr Joy said.
“The fact is they didn’t, that fee is only payable by businesses directly involved in the mining of coal, not to companies who provide support services to the coal sector.
“Part of the problem here is that during the boom, some mining companies were getting businesses just to pay the fee and then reimbursing them - whether they had to or not.
“However, with the passing of the construction boom, companies started asking why they were paying that fee when they didn't have to, so they stopped reimbursing.
“Some of those businesses have continued to pay it thinking they had to...but they don’t.”
Mr Joy also linked the growing complexity of the rules around employing people to the growing popularity of labour hire.
“Of course, it's encouraging labour hire,” he said.
“People don’t go and pay a 15% premium on their labour for the hell of it; they do it because it is simple and avoids all the jeopardy and expense with employing people directly.
“If it was simpler for businesses to employ people, I am sure there would be more of it.”
Mr Joy will be presenting a workshop on these issues on the 20th April. For details go here