Episode 1: Payroll in Australia

Luisa Rollenhagen  00:05

Hi there. I’m Luisa Rollenhagen, and you’re listening to ADP payroll around the world. ADP payroll around the world is an audio series that takes you around the world, hearing from locals as well as ADP experts, to explore how payroll can only be truly global when it’s local as well. To understand the nuances of payroll in different countries, it’s critical to have on-the-ground knowledge.

So we’re going to explore what makes payroll unique in each country, get insight into the work culture and learn from payroll experts who know the country inside and out.

Today, we’re going to Australia, a truly unique and beautiful place. This oceanic nation has long cultivated strong relationships with Asia, Europe and the Americas, serving as a bridge between many different global markets. But what does the world of work look like in Australia?

Kylie Baullo  00:56

I think the focus on paid parental leave, not only as an entitlement—You know, as an Australian worker, really, it is also used as the ability to compete for great talent, for those that are able to go over and above what the government is requiring as a baseline.

Graham Coutts  01:13

We are starting to see some more creative additional leave benefits provided by some of our clients, one of them, namely, being what they call ‘PAW’ternity leave. So leave to take off to look after your furry family members.

Luisa Rollenhagen  01:27

Those two people you just heard? That’s Graham Coutts, Senior Business Analyst at ADP, and Kylie Baullo, General Manager for ADP in Australia and New Zealand. We’ll be hearing more from them shortly.

Australia is a multifaceted nation, and so are its payroll challenges. Did you know, for example, that there are many different payroll schedules in Australia?

Kylie Baullo  01:49

We have payrolls that are weekly, fortnightly and monthly, and there’s federal and state laws. So frankly, it’s quite regulated.

Luisa Rollenhagen  01:56

Australia also has comprehensive parental leave laws that employees and employers need to be aware of. Both parents are entitled to up to 12 months of paid leave, and can split up the months according to their needs. We’ve spoken to local workers in Australia to find out what these payroll regulations mean for their work and home life.

Peter  02:16

I’m very cognizant that Australia has very good structural corporate systems around payroll or around leaves.

Luisa Rollenhagen  02:23

And that’s Peter. He lives in Australia too. We’ll hear from him later when he tells us more about how his current employer’s leave policy helped out his family.

Want to learn more about how payroll works in Australia? Well, let me introduce our payroll experts for this episode. Kylie is the general manager for ADP in Australia and New Zealand. And Graham is a Senior Business Analyst at ADP. Hello, Kyle and Graham, thanks for joining us. Could you tell me a little bit about yourselves and your experiences with ADP Australia?

Kylie Baullo  02:53

Hi, yeah. So I’m Kylie Baullo, and I’m the general manager for Australia and New Zealand at ADP. I’ve been with the organization 34 years actually, this year, and I did start many years ago as a graduate. So managed to work my way through the organization and spent time outside of Australia, and I now live in Melbourne, Australia.

Graham Coutts  03:15

Hi. My name is Graham Coutts. I am the senior business systems analysts based out of the Melbourne office and I have been with ADP since 2007

Luisa Rollenhagen  03:26

So I’d like to kick us off by asking you to share some fast facts about doing payroll in Australia before we dive into the juicier bits. I’m curious, what do you think makes Australian payroll unique?

Kylie Baullo  03:37

So what’s unique about payroll in Australia is that we have leave, superannuation—which is pensions—, structured awards, the pays are processed, or rather the pay periods can be weekly, fortnightly, monthly. And we do have federal and state legislation, so it’s highly regulated.

Luisa Rollenhagen  03:55

You just mentioned awards. What are those?

Graham Coutts  03:59

Yeah, an award is a set of rules and rates that define what you must pay to an employee if you engage their services. They’re generally industry based or occupational based.

Luisa Rollenhagen  04:09

It seems to me that Australian payroll really has a language of its own. There’s all this jargon, like the superannuation that Kylie mentioned. Can you explain that a bit more?

Graham Coutts  04:18

Superannuation is a type of pension. It’s compulsory that employers pay into an employee superannuation fund on behalf of employees, and in some cases, some contractors. Awards are a set of rules that are applied that define how an employee is paid, and they’re generally industry or occupational based.

Kylie Baullo  04:40

Some of the other terminology that you may hear when people refer to Australian payroll is STP, or the single touch payroll processes, which really is around automating the flow of information and payments to the Australian Taxation Office. So it’s all about digitization. You also can hear things like WGEA, which is about gender diversity, which is really focused on ensuring gender parity in terms of wages, and a really big focus in Australia right now. And payday super, which is an emerging legislation that’s in flight right now, and it’s focused on really ensuring that those pension contributions are paid in a more real-time fashion. And so there’s some of the topics that are floating around.

Luisa Rollenhagen  05:25

So there’s definitely quite a lot that organizations need to keep track of when processing payroll in Australia. What’s a major reason why someone should be excited about running payroll here?

Graham Coutts  05:36

One of the things that’s exciting about running payroll in Australia is that you’ll never be bored. The governments are always tinkering with the rules and always changing the way that you need to pay employees. They’re always tinkering with one various component or another. For example, superannuation might be the target one year, and then they might move on to awards in a later year.

Kylie Baullo  05:54

We definitely have seen an increase, though, Graham, I think, in the last 12 months, don’t you think? In terms of really the level of legislation and scrutiny around things like wage theft. And so it’s definitely become, I think the volume of changes has definitely increased.

Graham Coutts  06:10

Certainly since the change of government, there’s been a significant volume of new legislation that’s come through the pipeline.

Luisa Rollenhagen  06:16

Do you feel like Australia has more rules and regulations when it comes to payroll than other countries?

Kylie Baullo  06:21

I mean, I think the government definitely aims to ensure transparency, and there is definitely a strong position where there need to be guidelines in place to ensure fair and correct and accurate pay for employees. So I would say it definitely brings a level of structure in governance that maybe other countries don’t apply in the same way. But the transparency piece is a big one here in Australia, for sure, and that transparency also translates into automation for us and digitization, which means more real time access to data.

Luisa Rollenhagen  06:53

That makes sense. So if you’d have to sum it up, what does someone need to understand fundamentally about running payroll in Australia?

Graham Coutts  07:03

Work with experts. Australia is very, very complex. It’s got a lot of levels of authority, and you need to understand all of those rules and how they will impact you as an organization. You don’t want to be making the news for getting things wrong in Australia. Use the experts, like ADP, make sure you get things right.

Luisa Rollenhagen  07:22

Amazing, thanks for sharing your expertise. We’ll be hearing more from Kylie and Graham a bit later. In this series, we didn’t want to just share the invaluable local knowledge of ADPs professionals and partners, but also speak to real people on the ground about their own lived experiences with work and pay.

That man you heard in our intro who mentioned parental leave? That’s Peter. When our reporter in Australia caught up with him, he was imminently expecting the birth of his second child. Peter lives in Tasmania with his wife, his two year old daughter, and their Stafford Terrier, who, in Peter’s words, is the head of the household. He’s been working at a sustainability consultancy firm for five years, and when he and his wife began planning their family, Peter didn’t want those plans to come at the expense of his wife’s career.

Peter  08:09

There’s a hidden cost to well, not hidden cost, but a cost of childbirth to women in their careers. But it’s all good and well to be very cognizant of it if you don’t have the flexibility to do anything about it. So when looking to join the company, I was very cognizant of the benefits in parental leave, in particular. It was a major deciding factor.

Luisa Rollenhagen  08:29

Australia’s parental leave policy underwent some significant changes in 2023. Both parental caregivers, not just birth mothers, are now eligible for 20 weeks of parental leave paid at the national minimum wage, and when Peter’s employer offered generous additional parental leave policies, he knew it would make a big difference for his growing family.

Peter  08:50

When I joined the company, I was very cognizant of the difference between my current employer at the time and the company that I moved to, particularly their parental leave policy. I moved from a company that was an American-owned company, though with a base in Australia, that had basically the award-level amount of parental leave that was given.

Luisa Rollenhagen  09:12

Remember the award system Graham was talking about earlier? They’re legal documents that outline minimum pay rates and employment conditions.

Peter  09:20

And the company I moved to currently gives us 12 weeks at full pay with no requirement to demonstrate the primary caregiver. It’s basically, if you have a child within the first 12 months, you can take 12 weeks at full pay to be at home with your child. Previously, it was still very good, but you did have to demonstrate that you were the primary carer, so your wife, partner, or whoever had gone back to work. That’s no longer the case. So that level of flexibility for me not to have to demonstrate anything, to be able to just call it when I need to call it, is extremely liberating for our family, because it allows me essentially total flexibility to organize my life around my family, and with full consideration of the burden that parenting naturally has on the woman and the need to be, you know, for breastfeeding and for recovery from childbirth or cesarean delivery, whatever it may be.

Luisa Rollenhagen  10:13

For Peter, the fact that his employer is allowing him to take that paid leave in whatever way he wants is another major benefit that way he and his family can choose a system that works best for them. Peter also has the option of taking half his pay and then extending his leave to 24 days, increasing that flexibility even further.

And keep in mind that this is all in addition to the government parental leave pay, which employees like Peter can take during or after their paid employer-funded leave. For Peter, being able to take advantage of a flexible leave system means that he can have his wife’s back, whose schedule can be more rigid.

Peter  10:51

I’m on a permanent contract with a company that pays quite well with very generous leave benefits. And my wife, who has a PhD and is an academic and very intelligent—much smarter than me—, but has done contract work for various university institutions, which is the nature of that work. It’s no reflection upon her capacity or certainly her ability. I’m very cognizant that our conversations include us as a family unit, basically. So my job is her job. Her job is my job. It’s one earning potential. The configuration discussion is about when would be the most advantageous time to take leave for her to return to work in a capacity that benefits her career progression.

Luisa Rollenhagen  11:34

Peter’s story proves the impact a more inclusive parental leave policy can have on families and how some employers in Australia are even going beyond the government-sponsored leave programs to offer their employees better opportunities. And it’s no secret that these kinds of benefits can really make a difference when it comes to attracting and retaining talent.

Peter  11:53

My company has explicitly recognized that in a tight labor market and in a labor market that is in the consulting game, it’s high-performance teams. They recognize the need to attract and retain talent, and they recognize that the cultural shift and expectation amongst workers is for benefits that allow families to make decisions that are best for them, that ultimately are also best for the employee and therefore the employer.

Luisa Rollenhagen  12:23

I wondered whether Peter’s situation was typical in Australia, so I went back to ask Graham and Kylie.

Is it becoming more common for employers to offer their employees paid leave in addition to the government sponsored leave?

Kylie Baullo  12:37

Absolutely. I mean, I know here at ADP in Australia, we’ve had people take up parental leave from a father perspective in the recent few years that, if I think many years before, hasn’t been the case. So I can see that in our backyard. I can definitely see it with our clients as well.

Graham Coutts  12:54

And putting a personal experience here, my daughter is currently off on parental leave with her second child and her partner is currently off leave at the same time with her for the first four weeks. So to bond with the new baby.

Luisa Rollenhagen  13:07

Kylie, in your opinion, what’s driving this change?

Kylie Baullo  13:10

So what we’re seeing now is, as you know, there is greater transparency in gender pay parity reporting through, I’ve mentioned earlier in Australia, the WGEA standards are now publicly published for organizations that have more than 100 employees, as an example. There really is a level of transparency again, and that’s something you’ll see consistently throughout the Australian landscape, where people are selecting more organizations that are focused on a culture that is promoting gender parity, and really looking at some of those policies, like parental leave, that are bringing benefits to the table. So, I mean, what I would say is it’s a relatively new benefit that I’m starting to see some of the organizations we work with bring to the table. But I definitely think that it’s something there’s going to be more of as the data becomes more public, and we find that it becomes a competitive option when talent is choosing where they want to be. For sure.

Luisa Rollenhagen  14:09

These WGEA reporting requirements have now come up quite a bit. Peter was just talking about how his employer’s leave policy helped even out the career hit his partner would otherwise likely experience if she were the one taking most of the parental leave.

Will we continue to see more employee-centric measures to promote equality? Graham shares more.

Graham Coutts  14:30

Yes, we are starting to see some more creative additional leave benefits provided by some of our clients, one of them, namely, being what they call ‘PAW’ternity leave. So leave to take off, to look after your furry friends, your furry family members. There’s also a push at the moment from the union movement in Australia to get menstrual leave put into some awards as well.

Luisa Rollenhagen  14:53

I love that. I’m a big fan of paternity leave. Sign me up.

I’ve also heard that there’s a special kind of leave for people who volunteer to fight fires or help out when there’s a natural disaster.

Graham Coutts  15:06

Yeah, volunteer leave is one of the National Employment Standards. So if you are a member of —much of our fire services and disaster recovery services are actually manned by volunteers at the moment. So as part of the National Employment Standards, if you are a member of, for example, the Country Fire Authority in Victoria or the State of Emergency Service, you are able to take unpaid leave from your employment to go out and assist with disaster recovery such as a fire or a flood, which, living in Australia, is quite a regular occurrence.

Luisa Rollenhagen  15:38

I want to go back for a minute to the increased use of payroll data to inform policy decisions that promote more equality in the workplace. Can you tell me a bit more about how that works?

Kylie Baullo  15:47

So if I look very specifically at the data, we’ve got somewhere to go here in Australia in terms of looking at that parity. I mean, of course, we have, for a very long time now, had legislation to ensure that people that are doing the same roles are paid the same pay. What we’re talking about here, though, when we think about the level of transparency that we’ve seen this year as an average across the workplace right now, there’s a 17% difference between men and women on an aggregate, and that’s excluding the public service, and that’s excluding CEOs. So it’s the first time we’ve publicly named organizations, and the gap between that gender pay gap between organizations, so 17% is an average, but then you have some more organizations where there’s a 50% gap. And so I think that transparency is definitely something that is promoting a lot of chatter. People are talking about it. They’re discussing what an organization, what this means in terms of an organization’s culture. And I do believe, over time, not only will this drive meaningful change, but it will drive decisions talent will make in terms of the organization’s culture that they want to work within.

Luisa Rollenhagen  16:56

I think that’s an incredibly relevant point, and something that will continue to carry more and more weight as data analysis becomes more sophisticated.

How is ADP helping clients in Australia navigate this landscape?

Kylie Baullo  17:09

So ADP is definitely able to assist clients when they’re looking at their WGEA reporting to understand salary information, to understand the breakdown between roles and so really, a lot of the content that you need to submit on that annual report is available to you in the range of different ADP systems. And then also, on top of that, you know, we do work with some of our clients in sharing what we’re doing ourselves as a global organization, not only just in Australia, but some of the world’s best practices we have. And Australia is also no exception. Within the ADP family, it’s an important focus for us also. It’s a combination of providing meaningful data for your reporting, but also sharing whatever we can from our own experiences across our clients in terms of what moves the job. We’re very client centric, and in those conversations, what we like to try to understand is the problems our clients are solving and because of the one million clients that we work with across the globe, we’re able to then bring lots of different case studies and lots of different ways to solve those problems in different markets and different locations.

What we find is that some of the younger employees that are using the ADP systems and tools are looking at what will their leave be in 2, 4, 6 months from now, so that they can start planning that all important Christmas holiday break. As you may appreciate, here in Australia, we have multiple states, and state legislation does drive some of those entitlements. And really, when you think about it, we have a workforce that may move around states, and one of the things that ADP helps organizations do is to be able to track and ensure that employees are accruing their entitlements and that they’re paying their obligations in terms of payroll tax and other things based on those state legislations.

Graham Coutts  18:56

When new initiatives do come along, the ATO engages in consultation forums.

Luisa Rollenhagen  19:01

That’s the Australian Taxation Office. In case you were wondering.

Graham Coutts  19:05

ADP is and always will be involved in those consultation processes to make sure that the delivery of those services are there for our clients and the better good of Australia. An example of that was the single-touch payroll project. ADP was a member of the payroll working group in the development of those specifications, which meant that we had a seamless solution at the end of the day, and we will be involved with the payday super working groups when they commence.

Luisa Rollenhagen  19:34

I recently read that wage theft is a pretty significant topic in Australia, and that the government just passed an amendment to a law called the Closing Loopholes Act, which aims to even make wage theft a criminal offense. Why is this such a thing in Australia? It’s also such a strong term, isn’t it? It really evokes an emotion.

Kylie Baullo  19:52

So there have been some fairly notable issues where organizations, as an example, weren’t accurately keeping records, and so therefore, overtime wasn’t paid. There have been situations where employees have not had the correct superannuation pension paid on their behalf. And so that might come down to an organization and how they have recognized what wages are and therefore what is… again, in Australia, we call what is ‘superable,’ what you need to pay superannuation on. And so really, what you’re playing with is really the livelihood that someone’s going to have at their retirement age.

And what has been made very public is, in certain case studies, the impact that’s had on individuals. And so I think the press and the visibility that the average person has had into some of these cases, with how they’ve been broken down in the media, definitely has created a culture of concern that employers aren’t… And let’s say maybe this is through not having the right tools, the right level of automation or not working with the right organizations and experts… have just been thieving from their employees and not paying accurately.

And even as recently as this year, there are steps to go even further. And so you’ll hear phrases like Closing Loopholes One and Two. And effectively that’s looking at wage theft and bringing in sanctions and really ensuring that the guidelines that were set and the obligations that were set can be enforced.

Luisa Rollenhagen  21:27

Ah, that’s right. So I remember reading that closing loopholes two is basically an amendment to the original closing loopholes act. That means we’re going to be seeing much harsher penalties for wage theft in the future. So for organizations, it’s going to be more important than ever to make sure they’re paying their employees accurately.

Going back to the topic of leave for a minute, what’s something else you think people need to be aware of when it comes to leave policies in Australia?

Graham Coutts  21:52

The biggest issue with leave is that there’s multi-jurisdictions that administer leave. You’re talking about things like your annual leave and your personal leave. So personal leave, being sick or caring for an immediate member of your family, they are administered at a federal level, and they are part of the National Employment Standards that all employees must receive. You’ve then also got your state level-based leave, which is your long service leave.

So a bit of background, a long service leave used to be three months long service leave after 15 years worth of service, it’s a bit of a tie back to the historical roots of Australia: One month to sail back to England, one month holiday, one month to sail back to Australia. That’s where the three months come from.

Each jurisdiction, so we’re talking eight jurisdictions here in Australia, have their own rules for accruing long service leave and the rate of pay that you take long service leave at. So if you’re dealing with employees in multiple jurisdictions throughout Australia, you’ve got to administer all those rules and make sure that you are paying with the correct rules in mind. There’s not a one size fits all. Unfortunately, you have to be sort of aware of what their work history has been, what their current pay rate is, what their previous pay rates were. And then, in some cases, you need to do averages over their lifetime to work out how much you need to pay them.

Kylie Baullo  23:11

And Graham, one of the things we know as Australians is we like to travel, whether that is within our own country or abroad. And so moving from state to state, from Melbourne to Sydney, from Sydney to Brisbane, Brisbane to Perth, is common. And so as people move around the country, they are moving into different jurisdictions, as Graham has just said now, and if they’re working for the same employer, their entitlements will change. I think that’s why the leave accruals both for a long service leave and also annual leave can be tricky for organizations just to make sure that they get it right.

Luisa Rollenhagen  23:45

Thank you so much Kyle and Graham for your time and expertise! It’s been really interesting to hear about how these expanded leave benefits and these WGEA reporting requirements are helping companies attract more talent.

I hope you got a bit of a deeper insight into how payroll in Australia works today. If this episode has piqued your interest, or your company’s considering expanding into Australia and you want to learn more about payroll there, please go to the ADP Australia website, au.adp.com

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