5 ways a HCM suite can ease the impact of the minimum wage

Some of the nation’s lowest-paid workers will be given a 3.75% increase in both the minimum wage and Award wage, following the annual wage decision made by the Fair Work Commission.

It means the National Minimum Wage will increase to $915.90 per week or $24.10 per hour, from $882.80 per week or $23.23 per hour.

The decision, which affects approximately 2.6 million Australian employees (one fifth of the workforce), will likely impact many part-time workers in shift-based jobs in industries such as retail, hospitality, childcare & early learning.

While the decision has been applauded by many, especially given the rising cost of living, employer groups expressed concern about what this will mean for organisations that are also struggling.

"The increase of 3.75% will add to pressures in wage negotiations for similar increases for above-award employees. It is critical that we do not see these wage increases, decided in the currently high inflation environment, locked in for many years via multi-year enterprise agreements," said Innes Willox, Chief Executive of the national employer association Ai Group.

As with any minimum wage increase, this increase will likely also impact wages across the board, even for those paid well above the new minimum wage. Those workers may expect an increase to maintain the differential and keep pace with inflation. In a tight labour market, many sectors with large numbers of minimum wage workers were already having to pay more to attract and retain staff – placing further pressure on stretched remuneration budgets.

Compliance

As outlined on the Fair Work Ombudsman website, all employees working in Australia are entitled to a minimum wage.

The National Minimum Wage applies to employees not covered by an Award or registered Agreement. This is the minimum pay rate provided by the Fair Work Act 2009 and is reviewed each year.

Employees covered by an Award or registered Agreement are entitled to the minimum pay rates, including penalty rates and allowances in their award or agreement. These pay rates may be higher than the National Minimum Wage.

Each year, the Fair Work Commission reviews both the National Minimum Wage and minimum pay rates under Awards (Annual Wage Review). Most changes begin on the first full pay period on or after 1 July.

As a result of the 2024 Annual Wage Review decision, the minimum Award wages in some Awards may now be less than the National Minimum Wage.

For example, some Awards contain introductory pay rates for new employees in their industry. These rates generally apply for a limited time until an employee progresses to the next level.

If an employee is covered by an Award or Agreement, the minimum wage set out in the Award will apply instead of the National Minimum Wage.

It’s important to note that as part of changes to workplace laws, intentional underpayment of wages by employers will become a criminal offence. Read more here.

How can HR and workforce management software help?

Beyond ensuring compliance with the new pay rates, what else can employers do to minimise the impact of this increase? There are no quick or easy fixes. However, a human capital management (HCM) suite with workforce management (WFM) solutions can facilitate a more strategic approach to human resource management, enabling employers to trim labour costs without resorting to staff lay-offs.

To cite one example, research from McKinsey & Company covering the retail industry found that with workforce management tools, retailers can cut store labour costs by up to 12% while improving both customer service and employee satisfaction.

A data-driven approach, shaped by factors unique to each employer such as workload fluctuations, can help optimise rosters and schedules to get ‘more bang for your labour buck’. The following 5 tips are worth considering…

Tip #1: Optimise resources

Effective rostering helps managers schedule and manage resources – whether that be labour/staff numbers, rooms, equipment or support for workers. Humanforce’s Rostering & Scheduling solution enables HR and operations managers to optimise how their workers are being utilised and can help them work within budgets while still meeting Award/Employment Agreement conditions across one or many locations.

Our simple drag-and-drop roster builder means you can see what’s going on at a glance. It will also alert you of any potential scheduling clashes or errors. You can even micro-schedule short-duration tasks and breaks – and build costing, mandatory qualifications, employment agreement conditions, reminders and more into them.  

A team is only as strong as its individual members, so it’s important to take into account individual staff members’ preferred shift times. The shift offer and shift bidding features within Humanforce help managers fill vacant shifts effectively, without having to resort to agency staff. Even better, employees are empowered to choose the shifts that suit their personal circumstances.

Tip #2 below outlines how demand-driven rosters can benefit an organisation. The same applies to rotating rosters. Both experience and capacity can vary dramatically, which means rotating rosters are a bona fide way to ensure performance remains high at all times. Rotating rosters allow managers to create set shift times – such as breakfast, lunch and dinner; or morning, late and night – and then give workers different shifts each week. For example, a staff member might work the morning shift one week, the late shift the next week and then the night shift the following week. 

Not only does this provide greater flexibility for employers, but it also exposes workers to different tasks and is a cost-effective way to build new skills. For example, the opening and closing procedures for a café are markedly different. Employees opening the café need to prep food, grind beans, lay tables and set up daily operations. In comparison, closing shift staff must clean, count cash and lock up.

Read more about rotating rosters and whether these can help your organisation in our blog.

Effective rostering is all about balancing the needs of workers with the needs of the organisation, so that the right person with the right qualifications can be in the right place at the right time – and is eventually being paid the right amount. Happier, healthier employees are generally more productive and provide better customer service – so it’s the ultimate win-win.

Tip #2: Create demand-driven rosters

This tip is essentially about knowing your business. All leaders should have a reasonable idea of when work peaks and troughs occur; those busy times of the day/week/month/year when more staff are required to meet demand – and the same for the less-busy times. For those in retail and hospitality – and any business with demand-driven variables, really – it’s crucial to understand your demand curve of sales and roster accordingly. 

If you have more sales on a Monday, but it decreases over the week you can schedule more staff for Mondays and reduce staff numbers for the rest of the week. The same applies to public holidays, seasonal times like Christmas, and industry-specific nuances that will spark a surge in demand, such as sporting events. 

Well-integrated software solutions are critical here. The more data you have in your system, the more effectively you will be able to predict your demand curve and create rosters to match demand. The Humanforce suite presents robust integration capabilities, bringing together payroll, workforce management, human resources management and other business intelligence systems based on event data, as well as occupancy, foot traffic or PoS data, to help create an interconnected ecosystem. This ecosystem allows businesses to seamlessly link different sources of data to help create more efficient rosters.

Alternatively, Humanforce enables easy integrations with existing technology suites, including more than 100 pre-configured payroll integrations, enabling all employment agreement data to flow directly to payroll – resulting in less manual handling and fewer payroll errors.

Tip #3: Avoid excessive overtime while maintaining compliance

It may seem obvious but one of the best ways to improve your labour cost efficiency is to avoid overtime as much as possible. The occasional burst of overtime may not seem like much, and is often unavoidable, but even small amounts on a regular basis can quickly add up – especially with a larger workforce.

Whether your employees are paid at a higher rate for overtime, and if so at what rate, will depend on the Award(s) or Employment Agreement(s) in place. For example, an Award might provide that the employee will be paid at time-and-a-half for overtime up to a certain number of hours on a given day, and then double-time for any additional overtime on that day.

Of course, if your business is earning additional income during that overtime, it can be worthwhile. But more often than not, overtime costs you more without additional revenue. If your staff are struggling with workload, consider another part-time staff member to handle the workload and service your customers more effectively, or improve processes (see tip #4). Alternatively, undertake a cost/benefit analysis to assess whether in fact it makes good business sense to operate on a public holiday or have staff working overtime on a regular basis. 

Smart workforce management solutions can navigate this tricky terrain to ensure your labour costs stay within budget, and just as critically, you remain compliant with pay, loadings and conditions. For example, Humanforce’s Awards & Compliance solution is a sophisticated pay conditions engine. It can break down what needs to be paid for a shift that starts on a non-public holiday (e.g. 10pm), then crosses midnight into a public holiday. It will show how much that worker will be paid (at time-and-a-half) for the hours worked past midnight – all on one timesheet and without having to split it manually.

Given Australia’s complex, industry-specific regulations and payment conditions, a highly customisable interpretation tool for Awards and Employment Agreements is desirable.  Read more about the features of our pay conditions engine in our blog here.

Tip #4: Standardise key processes

Create consistency and transparency by standardising key processes like tracking hours, calculating pay, distributing leave, swapping shifts, and so on. By defining these processes from the word go, you’ll set an even playing field that creates a mutually beneficial culture of fairness and understanding.

For example, if an employee wants to request leave and the process is unclear, they may leave it until the last minute, which stresses them out and leaves their employer in the lurch. Often the only alternative to fill roster gaps quickly is to offer overtime to other team members or take on agency staff who may not be familiar with your processes and can be costly. With an established leave request process in place, such a scenario could be avoided.

Undertake a review or audit of team processes. There are several things to look out for. You want to pick up on anything that is chewing up your team’s time or creating headaches in the long term. Compile the below points into a checklist to keep them front of mind:

• Stores, sites or business units exceeding their labour budgets

• Any manual data entry being undertaken

• Paper-based processes and how they are managed

• How many employees are spending time managing these processes, and the impact this has on business growth 

• Spreadsheets being used to track anything throughout the process

• Multiple people handling the same forms

• Managers manually filling shifts using phone calls, texts and emails to try and contact staff last minute

• Channels like WhatsApp or Facebook being used to change shifts

• Employee dissatisfaction about processes

• High error rates in payroll or staff being paid incorrectly

When conducting your research, be sure to get the entire picture. Speak to staff at all levels of the process, from managers to frontline staff and everyone in between. Investigate how processes work within different teams and departments and find out where the weak link is. 

Remember to look for different processes being used to achieve the same end result in different teams/departments/locations – this is common!

Tip #5: Obtain accurate clocking data

Meaningful insights are only possible with quality data. Incomplete, inconsistent, duplicated or incorrect data can result in poor decision-making. The right systems can help. Tracking employee clocking times is a prime example. If pen-and-paper timesheets are still be used, it’s possible that time theft is occurring. Whether it’s malicious or unintentional, chances are you’re regularly overpaying your employees.

Alternatively, the data being manually entered is being misinterpreted. It’s easy for mistakes to slip through: a staff member enters the wrong name, HR reads the wrong column, or someone’s ‘7’ looks like a ‘1’.

Electronic systems create infallible records. They also save time for managers. As an example, you might have a team of 25 people, each working 3 shifts a week. In this case, your manager has 75 timesheets to approve each week. Say each timesheet takes 2 minutes to check on average, and that the manager spends 20 minutes following up on missing timesheets, errors, sick days, or other discrepancies.

Using Humanforce’s Time & Attendance solution, clocking and authorisation by exception features eliminate the need to manually review correct timesheets. All that’s left is the 20 minutes needed to resolve unexpected issues – a saving of 2.5 hours of admin time each week.

From simple kiosks to mobile clocking, Humanforce offers solutions to suit the operational and security needs of every business, in addition to innovative QR clocking, finger vein scanning, facial recognition and geo-fencing features. You can relax, knowing that you’ll always have the correct time and attendance data once payroll processing begins.

More than just remuneration

After four years of constant disruption, including a global pandemic, acute skills shortages, and now an economic downturn, many businesses will struggle in 2024. This minimum wage increase does not need to the proverbial straw that breaks the camel’s back. While it’s important to remunerate your staff fairly, and paying extra can attract and retain top talent, money is not always the main motivator.

Although times are undeniably tough, talented people are drawn to a job by more than just money. Ensuring your company offers interesting and challenging work, a mission to believe in, and a great working culture that offers growth, a good work-life balance, and recognition for a job done well, will stand you in good stead – without blowing the budget. 

About Humanforce

Humanforce is the best-in-one platform for frontline and flexible workforces, offering a truly employee centred, intelligent and compliant human capital management (HCM) suite – without compromise. Founded in 2002, Humanforce has a 2300+ customer base and over half a million users worldwide. Today, we have offices across Australia, New Zealand, and the UK.

Our vision is to make work easier and life better by focusing on the needs and fulfilment of frontline workers, and the efficiency and optimisation of businesses.

To learn more about how Humanforce’s solutions can help automate people processes in your business, please contact us.