Compliance Matters - Underpayments

Regulatory compliance touches or encompasses most operational areas of business. Your investors require it, government bodies require it, your clients want to see it, the media is ready to jump on those who don't do it. Compliance with the many and varied employment related laws are one of those areas, and it's easy to get it wrong, and it can be costly if you do.

Over the next number of weeks, we are going to look at a range of workplace compliance issues for which business owners are responsible and how to ensure you are compliant, or at least working towards compliance.

Underpayments

Complaints relating to underpayment of wages, failure to pay superannuation, avoiding redundancy payments, and unpaid training periods have at times become front-page news over the last couple of years. Most readers will be aware of the ongoing issues relating to widespread underpayments of 7-11 employees. Those claims being determined, over 3500 of them, have amounted to over $150 million in underpaid wages.

Further, employment related matters are utilising class action type claims where alleged underpayments have affected large groups of employees. These types of claims were something previously reserved for consumers, bank clients and shareholders. Of recent note is the class action claim being undertaken against Airservices Australia by current and former employees.  Airservices Australia is a government owned corporation responsible for air traffic control, fire fighting and navigation services at a number of federally-leased airports across Australia.

It has been alleged that because of internal restructuring, Airservices Australia employees signed off on new employment contracts that left employees working under conditions that resulted in significant reductions and shortfalls to superannuation and redundancy payments. The lawyers representing approximately 600 current and former employees hold the view that the claim will come in at around $40 million. If they win the case, there may also be considerable penalties on top for breaches of theFair Work Act. Let's watch this space over the coming months.... years.

Simple steps

Underpayment claims are not always based on deliberate or wilful behaviour by employers, but also result from innocent oversight due to the complexity of interpretation and application of the terms of Awards.

At the minimum, and to avoid non-compliance, employers should:

  1. Be aware if the Fair Work Act and system applies. If may not be if your business is based in Western Australia.
  2. Be familiar with the application of the National Employment Standards (NES).
  3. Ensure the terms of any relevant Modern Award are applied. If in doubt whether an Award applies and which one, send us an enquiry via the Workforce Guardian Online system.
  4. Ensure employees are paid at least the minimum Modern Award pay rates for the work they perform and for the hours they work. These minimum rates change every year.
  5. Keep appropriate records of wages paid, superannuation contributions, and hours worked. These records will often be you only defence against claims by employees

Workforce Guardian helps businesses comply with their obligations by understanding what's required and providing qualified commercially driven advice.

Need help with HR and compliance?

Talk to the HR Experts at Workforce Guardian.