In Australia, all employees have minimum workplace entitlements in accordance with federal and state workplace laws. This is regardless of an employee’s position or their employment status (ie. whether that are casual, trainee, part-time or full-time). On a federal level, the Fair Work Act 2009 (the Act) provides a safety net of the minimum entitlements, as well as:
- Enabling flexible working arrangements;
- Enforcing fairness in the workplace;
- Providing the process for ending employment; and
- Preventing discrimination against employees
So, what actually is wage theft?
Despite employees having minimum entitlements within the workplace, when it comes to wages and conditions, historically there has been widespread exploitation of employees, particularly in certain industries and some of which has been deliberate and systematic.
So, what is wage theft? There is no consistent working definition, however, it is broadly defined as paying employees less than what they would ordinarily be entitled to, such as non-payment of wages, penalty rates, allowances, overtime or other entitlements of personal, annual or carer’s leave.
Wage theft is not isolated to a specific section of Australia’s labour force, but rather, is prevalent across all industries and business sizes, including notable and large corporations such as Qantas, Coles or the National Australia Bank (to name a few of many).
While in New South Wales, wage theft is not considered a crime, recent laws have been introduced within Victoria and Queensland which now classify wage theft as a criminal offence and exposes employers and others that may be associated to harsh penalties including imprisonment if found guilty.
How do you protect a business from wage theft?
Paying an employee for the number of hours they have worked at the correct rate seems like it should be quite a simple task. However, employers can often find themselves in some strife if they do not understand:
- How to pay their employees’ correctly when using an automatic calculating payroll system including superannuation, overtime, penalty rates etc;
- The employees’ entitlements under the relevant modern award or enterprise bargaining agreement.
It may be the issue that some payroll systems are not equipped to calculate payments correctly and are therefore the cause of any underpayment however this is not a valid defence that a business can rely upon and business owners still have obligation to ensure they are compliant. To ensure that employees are being paid correctly, the following is recommended:
- Conduct an internal audit/review of your payroll system to ensure that it not only suits your businesses needs but calculates employee wages and other payments correctly (e.g. superannuation);
- Implement a new mechanism or review the current mechanism in place which records the number of hours an employee has worked. Consider whether such data is manually entered into a payroll system or whether there is an easier means to record hours worked;
- Consider training options for payroll staff to ensure they understand how to use the payroll system correctly as well as having the knowledge to calculate employee payments in relation to wages, superannuation, overtime, penalty rates etc;
- Pay attention to and understand the relevant instrument that governs the particular employee to ensure they are classified correctly and are being paid the correct wages and allowances; and
- Keep a record of all employee payments in an appropriate and easy to refer back to manner.
What to do next
Employment law is not a set and forget task. You may be compliant one year but in breach the following. If an employees’ rates, spread of hours and entitlements aren’t regularly reviewed at least on a yearly basis, it is very easy for employers to be caught out and liable for an underpayment claim and penalties.
We recently presented a webinar on wage theft, and if you are interested, you can access the webinar here https://www.youtube.com/watch?v=ELiJr6noDHg .
Please contact our experienced Workplace Relations team if you would like assistance in reviewing or advising on your employment arrangements, or require general employment advice.
