The Council of Small Business Organisations Australia (COSBOA) has urged the Federal government to undertake an urgent review and make the necessary reform measures to the current payroll and set-off clauses.
The appeal comes in the wake of the recent Federal Court ruling in the Woolworths Group Ltd v Fair Work Ombudsman case which COSBOA says has created an “impossible payroll burden” for small businesses.
In the ruling, the court stated that employers can no longer use set-off clauses to balance overpayments in one pay period against shortfalls in another, including carefully-drafted contracts. As such, all entitlements must be paid in full in every single pay period.
The court also directed employers to keep detailed records for every pay cycle, lest they face compliance risk.
“For small businesses – without payroll departments, HR teams or lawyers – the ruling is unworkable. It increases costs, red tape, and legal risks, and makes annualised salary arrangements almost impossible,” COSBOA said in a statement.
The council emphasised that the ruling has serious repercussions for small businesses such as further cashflow problems due to costly backpay claims and loss of protection for annual salaries if each pay period does not meet all award requirements. Small businesses will also be made more vulnerable due to extra red tape and record keeping as they do not have dedicated HR and payroll teams to handle such matters.
As an immediate solution, COSBOA has called on the Federal government to provide clear guidance to employers on how to comply with the ruling. Ultimately, the organisation says the long-term solution is for the government to undertake an urgent regulatory or legislative fix that will “restore flexibility in payroll and set-off clauses.”
For this end, COSBOA has called on its members and other business groups to write to the Minister for Employment and Workplace Relations to seek immediate action on the issue by acting on the two action items proposed by the organisation.
This article was first published on sibling website Inside Small Business.
