As recently as a few days ago, the Senate agreed to launch an inquiry into wage and superannuation “theft” by employers. This has come about as a result of what many are now referring to as an epidemic of underpayment in wages and superannuation entitlements across industries. The recent high-profile case to hit the headlines as “Australia’s biggest underpayment scandal” – Woolworths, amounts to hundreds of millions of dollars.
The Woolworths issue came to light during an internal review conducted after implementation of a new enterprise agreement. Managers who were on annualised salaries noticed a discrepancy when they compared their pay under the new agreement with what they were being paid before. When this was realised, the company apologised and promised to make up for it, including actioning a back-payment for the reviewed period between September 2017 and August 2019. The size of the underpayment by current estimates across the Group is predicted to be in the range of $200 to $300 million (based on the possibility that the back payments go as far back as the introduction of Modern Awards in 2010).
The Senate inquiry will aim to identify and investigate the most effective means to uncover wage and superannuation theft and seek to determine how to protect employees who are subject to underpayments. It will also consider the tax treatment of recovered entitlements and weigh-up changes to the existing legal framework to assist with the recovery and deterrence of future wage and superannuation theft. This also means a greater focus by the Fair Work Ombudsman on workplace audits and wage payments in line with Award provisions.
Many people are debating the use of the word “theft” with respect to wage underpayments and it’s true that there are degrees to this offence from a conscious decision by some employers to underpay their employees (as difficult as this is to believe) to a much larger group who simply get it unintentially wrong.
What can employers do to make sure they don’t fall short of their obligations and on the wrong side of the Fair Work Ombudsman? Mistakes can be made, however implementing some key checks will go a long way towards safeguarding your business.
Many employers believe they are paying an annual salary above the award wage without completing the above due diligence and this can get them into trouble, as many annual salaries fall short when compared to what an employee could have earnt under their award (as demonstrated by the Woolworths case).
These simple steps will go a long way to ensure that your business is compliant with minimum wage requirements. In addition, every business should also conduct periodic reviews of their payroll system to make sure that award conditions are correctly configured.
Single Touch Payroll reporting together with a greater focus by the Fair Work Ombudsman’s office on wage and superannuation payments and reporting by employers are already making it difficult for businesses of any size to fall short on their employer obligations. If you are unsure of your employer obligations and require support with finding a solution or just don’t know where to start in reviewing your obligations, contact us on 0409 806 812 for an obligation free discussion.