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HR and payroll: what you can expect in 2021

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This year, managing HR and payroll will be no small task. While many Australian businesses continue to face an uncertain future, the workplace trends that emerged during COVID-19 are set to strengthen over the next twelve months. 

Remote working and the bigger ‘flexibility’ picture

COVID-19 heightened the importance of workplace flexibility in conversations around employee wellbeing and modern work culture. Research conducted by payroll and HR software solutions provider, Ascender, shows one in three (37 per cent) employees would be prepared to sacrifice a small amount of pay to work from home. This mentality is especially noticeable among those aged 18 to 25, one that will underpin most talent’s job-seeking criteria, staff retention and satisfaction, and career development plans in the near future. 

The grounds have shifted in this generational preference of ‘flexibility’ over ‘security’. The research reveals that of the 37 per cent above, nearly half (4 7 per cent) saved more money while working from home and over a quarter (28 per cent) lived a healthier lifestyle through improved diet and exercise. Employers should be looking at these insights as a starting point, and then design arrangements that cater to their employees’ work and lifestyle needs.

Employers offering flexibility also need to think about how to seek a balance between the needs of individual employees and the collective business goals. How much flexibility is enough? How can we maintain barrier-free communication to keep people engaged? As distance-shrinking technology accelerates, how do we make sure the business still runs on creative and spontaneous ideas? In 2021, a well-rounded, bespoke workplace flexibility policy should adopt both online and offline communication methods to maintain creativity and vitality.

Focus on technology and digital transformation

The COVID-19 pandemic accelerated migration to digital technologies. McKinsey Digital estimated that five years of digital adoption occurred in just eight weeks in mid-2020.

Technology remains key to maintaining productivity, especially as Australian businesses move to a more distributed and remote workforce in 2021 and beyond. From a general perspective, this includes investment in online collaboration tools and video conferencing software, supported by a reliable network infrastructure and increased cybersecurity measures. Payroll and HR teams will also find themselves more involved in using Robotic Process Automation and AI technology to streamline manual processes and enhance data accuracy.

Pay rises will yield to job security

Even in the recovery stage of COVID-19, salaries and wages are likely to remain static for a while. Governments are considering scaling back or discontinuing employment and other business subsidies, which, for employees, naturally ratchets up the importance of keeping their jobs.

Under pandemic conditions, employers are tasked with multiple challenges. These include restructuring employee packages to compensate for stagnant income levels, fostering clear communication to allay fears around job security, ensuring mental wellbeing without in-person access to HR, support resources and colleagues. Employers must also closely monitor changes to Government employment subsidies and evaluate how remote work has impacted non-cash benefits such as gym memberships and team lunches.

Staying nimble to Government legislation

Businesses need to be acutely aware of changing government legislation and policies. In March 2020, the Fair Work Commission (FWC) tightened policies around record-keeping which significantly removed the perceptions of workplace flexibility. As Aussies’ desire for more ‘freedom’ increased, FWC rolled out a draft award flexibility schedule last September, introducing the offering of flexible work arrangements. While this is great news, the changes that took place in a matter of months suggest the volatility of policies that could directly impact how a business is performing.

Businesses should also actively build better awareness of record-keeping and payroll compliance. According to Ascender’s research, 28 per cent of employees are unsure how their time is tracked at work. This is a concerning result, especially as legislation around time-tracking is getting more complex and the penalty more severe. This can be seen in the Australian Taxation Office’s recent proposal to commence Single Touch Payroll Phase 2 by July 1st, 2021 mandating employers to submit much more itemised, complicated pay data reports than before.

Even with the aid of technology, record-keeping is an area highly prone to errors and miscalculations which can snowball into more significant issues such as underpayment. The research results and the Government’s ambitious approach to payroll, call to the importance of better employee education around policies, payroll practices, and financial literacy in 2021.


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Andrew Wilson
Andrew is currently the Chief Executive Officer of Ascender HCM, the leading provider of payroll and HCM software and outsourced services in Australia, New Zealand and the Asia-Pacific region.