Wage theft: Underpayment of wages

This is a hot topic right now and will continue to come under the watchful eye of the fair Work Ombudsman.  High profile businesses have either been found guilty of underpaying their employees or have come forward and admitted to underpaying employees. As a business owner or leader, you must make sure employees are paid in line with the relevant Award or applicable Agreement. Wage theft, as labelled by the Unions, is any payment for which an employer does not adequately compensate their employee.  This can be in the form of underpayment of wages, super, over time and leave payments to which an employee is entitled under legislation. The Morrison government has now committed to criminalising wage theft.

One of the most common areas where employers fall into this trap is by paying an annualised salary for a role that is an Award role and the rate of increase has fallen behind the Award increases over the past few years. The hospitality industry and administration clerical roles are two of the most common areas that are being exposed. An employee has six years to make a claim for an underpayment from the date they were underpaid.

Over the past six months several of my clients have found that their set salary for certain roles has fallen below the relevant current Award rate. Awards have risen year on year at more than 2% and as much as 3.5% resulting in some 20% over seven to 10 years.  where a business has had set amounts for certain roles like Chef first year, second year, third year and the business has started each new person on the same amount as they did some five years ago, they will now most likely be short changing the employee several thousands of dollars per year.  The error has arisen especially in the hospitality industry with the lowering of weekend penalty rates and a first year chef starts on $55,000 pa working an average 40 to 42 hours each week, including some weekends and nights after 7 pm. Add in the occasional public holiday and no day given in lieu and it is most likely that the employee will be more like more than $15,000  under paid in a year. If time off in lieu is used this underpayment amount may be much less or nullified.  Other savings can be achieved by working two four day weeks each month.  The important thing is to ensure to track all hours worked, ensure all overtime is approved and agreed and if in doubt pay by the Award to ensure there is no salary gap and underpayment as the time to review a claim, settle the claim and perhaps a pay a fine is just not worth it for the employee or the employer.

So, are you stealing from your employees?

Here are the key steps to check if you want to have it right

  1. Check that the award which the employee is under is correct;
  2. Check that the level which the employee is paid under is correct;
  3. Check that all allowances, etc as outlined by the Award are paid correctly;
  4. If you are paying a salary – ensure the employee is no worse off financially then they would be under the award;
  5. Check you are remitting superannuation as required;
  6.  Check payslip information meets all requirements and is accurate.

If you are not sure about any of these steps, call Chris at HR & HSEQ Consulting on 0437 334513 for a quick assessment and review before you face a claim from a current or past employee.