Sydney-based workforce compliance platform Yellow Canary has secured $11 million in a funding round led by investment firm Parc Capital, along with participation from existing investors.
Founded in 2017 by Marcus Zelter and Brenton McSweyn, the regulatory technology platform allows employers to manage employee payments, entitlements, superannuation, taxes and workforce composition. Partnering with law and accounting firms, Yellow Canary has delivered real-time cost and accuracy benefits to a range of clients, including SMEs and ASX100 companies.
According to the Financial Review, Yellow Canary is targeting a problem worth over $6 billion at a minimum in Australia alone, given employers were found to have failed to pay $5 billion annually in contributions to employees’ superannuation accounts.
“We put the Yellow Canary team and technology through an exhaustive due diligence process and are very impressed with the potential of this team, the technology and of course the considerable market opportunity,” said Grant McCorquodale, Executive Chair, Parc Capital.
“There is a clear case that every ethical employer in Australia should take all steps to mitigate risks relating to workforce compliance and be able to demonstrate this to their shareholders, Boards and employees.”
Reports suggest that Yellow Canary has managed over $11.4 billion in employee payments, 2.8 million payslips and 272 million work hours in the last year alone, across industries such as banking, insurance, retail, hospitality, manufacturing and health services.
“The complexity of the workforce compliance landscape has meant that other approaches leave employers without the confidence they need to ensure that they are meeting their compliance obligations,” said Yellow Canary Managing Director and Co-Founder, Marcus Zeltzer
“Our technology and services are ideally positioned not only for historical remediation needs but to provide ongoing compliance monitoring across the range of workforce compliance challenges facing employers.”
Approximately 13% of Australia’s total workforce was affected by underpayment in 2020, according to a PwC research. Mapping these numbers with the data from Fair Work Ombudsman (FWO), PwC found the cash value of underpayment at $1.35 billion per annum.
In 2020-21, the FWO completed 18,696 disputes and recovered nearly $148.4 million for almost 70,000 workers. This grim state of affairs can be seen in the latest data for superannuation underpayment estimates as well, reveal media reports.
Data from the Australian Taxation Office (ATO) found that employers failed to provide $2.5 billion in contributions to employees’ super accounts during 2018-19. Of the 17,000 complaints received about superannuation theft, employers were found to be compliant in only 25% of cases.
The startup is looking to leverage the funding to boost engineering capabilities and hire “more talented people'' as it plans to position itself as a fast, accurate and scalable provider of compliance monitoring tools backed by automated technology, to Australian employers.
Commenting on the regtech platform’s ability,the startup’s Chief Technology Officer and Co-Founder McSweyn said, “The algorithms of our platform can perform the grunt work of calculations and enable employers to check and make good on their obligations in a really efficient and scalable way.”
He added that the platform could work with any systems its customers used for payroll, time, and attendance.