By Brigitta Poulos
In early June, on the same day as the Fair Work Ombudsman (FWO) kicked off seven weeks of hearings against Coles and Woolworths, alleging the retailers knew salaried staff were working up to 13 hours a day but failed to ensure they were paid overtime and other conditions, outgoing Fair Work Ombudsman Sandra Parker dropped some astonishing numbers about one of Australia’s worst-ever underpayment scandals: $430 million, owed for 13 years of underpayment.
Parker said mining giant BHP’s announcement in May that it had incorrectly deducted public holidays as leave for more than 28,000 employees was frustrating, given she had put the miner and other top listed companies on notice about their payroll four years ago. That $430 million includes superannuation and interest, and is the result of incorrectly treating public holidays as work days when deducting annual leave since 2010.
The source of the problem? BHP is understood to have failed to update its payroll software to account for National Employment Standards (NES).
Owing $430 million is enough to wipe most Australian companies off the map. And while underpayments are very real and very common, the only good aspect about them is they cost you less the sooner your correct them. Underpayments can be a scary thing for an employer especially if you become aware of the fact that you may have underpaid employees for years and now need to rectify those mistakes.
At this time of year, with recent wage increases and the start of a new financial year, it’s more important than ever to make sure you have all your ducks in a row and are dotting your i’s and crossing your t’s.
Recently, Parker said that meaningful investment in proper payroll, record keeping, and auditing can go a long way towards avoiding underpayments. As they say, ‘prevention is better than cure’ – having proper systems and processes in place is one of the best ways you can proactively protect your business against an underpayment claim.
From 200 to 2300: you’re over ten times more likely to receive a compliance notice if you underpay staff
Wage underpayment has been a key focus of the FWO in recent years, with notorious wage theft scandals and large-scale underpayments coming to light. From issuing only about 200 compliance notices a year in 2018, the FWO has increased to issuing 2,300 compliance notices in 2021-2022.
While the FWO prefers to take the approach of giving employers the opportunity to rectify their mistakes and negotiating practical and reasonable actions, Parker says the FWO will “continue to take [employers] to court” for any businesses that “fail to cooperate or refuse to meet” their minimum payment obligations.
Whether you’re a small business or a large corporation, the FWO is taking a special interest in policing wage underpayment and is upping its compliance and enforcement in this area.
Get your payroll compliance in check. Save now, avert costly surprises in future
Prevention is better than a cure – it’s much less costly, less damaging to reputation, and more efficient to pay employees correctly than to rectify underpayments. Consider investing in an efficient payroll system and seeking advice from HR experts on what you should be paying your employees.
The team at HR Assured offer award-winning payroll compliance services. If you’re not 100 per cent confident with your payroll processes or award/agreement interpretation, get in touch: our workplace relations experts could save you thousands in potential fines and court-ordered penalties.
Not an HR Assured client and need some advice on managing underpayment risks? The team at HR Assured can support your business on a range of workplace matters. Contact us today to arrange a confidential, no-obligation chat.
Brigitta Poulos is a Workplace Relations Consultant at HR Assured who loves helping clients and businesses achieve excellent workplace compliance with their obligations and duties, and interpretation of relevant employment legislation and awards. She particularly enjoys researching and explaining new or ‘hot’ topics in the workplace relations and human resources fields to our clients.