You can not pick up a newspaper or turn on the news without hearing about Wage Theft. From George Calombaris, Woolworths, Heston Blumenthal, Bunnings right through to the good old ABC, some very big names have been caught out underpaying employees less than their legal entitlements. But why is this happening and how can it be avoided?
What’s going wrong?
Many a finger has been pointed at the complexity of Australia’s industrial relations system with many not fully understanding how to apply, or be compliant, with Modern Awards. There is some basis to this excuse as there is a lot to remember - applying the correct level once you have worked out which award applies to your industry, remembering to factor in loadings for weekends, late and early start penalty rates, overtime, applying increases following the minimum wage review and updates following birthdays up to the age of 21 in some but not all awards, and trying to understand and apply the myriad of allowances that may or may not apply to each employee! No wonder some business owners find all of this overwhelming!
Another aspect that has caused challenges resulting in the Wage Theft headlines, is the impact of annualised salaries*. Annualised salaries roll up the overtime and penalty rates an employee is entitled to under an Award into an annual sum. It can be a more convenient process that both employers and employee prefer as it allows for a regular sum to be paid each pay cycle. And it is lawful, but only if employees are paid the same or more than their award entitlements. Unfortunately, this process can be the cause of underpayments when it is not checked and monitored regularly to determine the original calculations and pay rates are meeting the legal requirements.
The Federal Attorney General, Christian Porter, is very clear as to how underpayments are viewed when he too uses the vernacular term “wage theft”. He has gone on record as describing corporate Australia as being ‘asleep at the wheel’ making it clear that he believes that blaming underpayments on award complexity as unacceptable. His department in currently working on a proposed wage theft bill that imposes criminal sanctions for the most flagrant abuses of underpayment. It is not anticipated to impose criminal penalties for accidental underpayments although unions have called for the offence to apply to ‘reckless’ conduct.
We know that most businesses are not acting in a deliberate manner when it comes to underpaying their employees. On the whole, the majority of our clients actively seek our assistance to ensure they apply the correct entitlements, and request that we keep them updated with any changes to applicable Modern Awards. But when it isn’t managed correctly, and it does go wrong, the effects can be highly damaging to your business. Theft is a powerful and emotive word and labelling a company as wage thieves can cost them more than back pay. Just look at the impact on Calombaris’s MaDE – voluntary administration following the scandal with the loss of a significant number of jobs and the closure of some great Melbourne eateries. Reputations are damaged – if not destroyed.
For the less prominent employers that are caught out underpaying employees, reputational damage may not impact them. But they simply may not have the ability to make repayments and remain viable with closure an unavoidable reality.
How can you avoid wage theft in your business?
It’s really simple. You need to review the application of Awards in your business and ensure that every legal entitlement has been applied to each employee now and moving forward.
OK, maybe we’ve oversimplified it a little… so this is where we recommend you get in touch with the HR consultants at HR Staff n’ Stuff (you can call someone else but we really are the best at this stuff if we do say so ourselves) and we can come in and run an audit, assist with updating or providing new contracts, ensure the right Awards are being applied correctly, and generally go over all of your processes to ensure you stay on the right side of the law when it comes to employee entitlements.
It is better to be on the front foot and proactively resolve any concerns you may have around the application of employee entitlements so give us a call or send us an email and we can have a confidential conversation around your business needs and how we can help. We always on focus on understanding and helping, not judging, so if you think you’re in a pickle, don’t stress and call for help.
* Important to note is that there are some changes coming in relation to Modern Awards and annualised salaries and HR Staff n’ Stuff will be updating you all shortly with our learnings.
The HR Staff n' Stuff team all contribute to our blogs. Enjoy the read!