Small business owners are struggling with the regulatory environment including Single Touch Payroll which is now part and parcel of managing a workforce with nearly half saying the stress is negatively impacting their mental health.

Anna Curzon, Chief Product Officer at Xero, said payroll compliance continues to be a major challenge for employing businesses, with more than half of Australian small business owners finding the ever-changing regulatory environment stressful and confusing.

In a new report Xero found many small businesses are struggling to stay on top of regulation or award requirements around employee entitlements and payments, with more than half (56%) agreeing it’s stressful or confusing and 37 per cent worrying their staff will be paid incorrectly due to confusing payroll obligations.

The Changing world of work report looks at the workforce challenges faced by Australian small business employers, the workplace experiences of employees, and the critical role of technology in this new world of work.

According to the report, payroll compliance is driving software adoption, with more than half (51%) of employers reporting that software helps them with managing compliance. As a result, a third (38%) said software has helped to reduce their stress levels, with more than half (56%) agreeing technology that can help forecast payroll costs would make them less stressed about their workforce.

In addition to a changing regulatory environment, almost a third (29%) of employers said accurately tracking employee time and attendance was a top driver of technology adoption. Over the past 12 months, more than half (54%) of employers found that staff didn’t have ideal rostering.

After retaining staff, the second most common concern for employers when managing staff is that they aren’t as productive as they could be. The average employer said it takes staff up to four months to get up to speed and reach full productivity, with employers in hospitality saying it takes up to five months. Conversely, two in four (42%) employees say poor communication hampers productivity.