Australia: Wage theft – can you avoid it?
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A hot topic at the moment is "wage theft". From Wesfarmers and Target to Woolworths, 7-Eleven, the Commonwealth Bank, Sunglass Hut, Qantas, the ABC and probably the most well-known, George Calombaris's MAdE Establishment. The concept of 'wage theft' has been dominant in the headlines for years, so, what is 'wage theft' and how can you prevent it?
Wage theft is the unlawful underpayment of remuneration to employees. This may occur in a number of ways, and it does not need to be deliberate. It may include underpaying ordinary wages, underpaying penalty rates or overtime, failing to pay or underpaying superannuation, termination payments, other commissions earned or entitlements such as leave. It may also include unauthorised deductions from an employee's pay or demanding employees payback money earned for promises such as immigration and visa support.
Investigations conducted by the Fair Work Ombudsman has revealed wage theft is widespread and getting worse; it is not limited to any one industry.
As has been seen, the extent of underpayments is a number of high profile cases has been significant. The Made Establishment empire owned by celebrity chef George Calombaris had underpaid kitchen and waitstaff by $7.83m. Woolworths confessed to underpaying staff $300m over a 10-year period, Coles underpaid its staff by $20m and Target's underpayment bill hit $9m.
One of the reasons for underpayment of wages is that employers often do not fully understand the industrial landscape they operate in. Australia has a highly complex industrial relations system of Awards. For businesses that have a large number of employees working various shifts that change frequently, or are working long hours, a robust system of record keeping is critical. The business must have a system by which the actual hours worked are recorded and those records are checked against Award standards.
It is also critical, therefore, to have a comprehensive understanding of the Awards relevant to your business; to have in place policies and procedures to effectively and accurately capture hours worked (including overtime hours); to conduct regular audits of the time-keeping and payroll records to ensure your staff are being paid correctly. Failure to ensure your staff are paid correctly can have a very significant financial impact on your business, not to mention the reputational damage any negative publicity can have.
Ensuring staff are not underpaid can be particularly difficult for businesses without dedicated and experienced HR personnel, or payroll staff. At Mellor Olsson, we have experienced solicitors who can review your records and pay information and compare it against the relevant industrial instruments in order to identify any issues related to underpayments.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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