Wage Theft: Addressing Employee Underpayments in Australia

Over the past 18 months, there have been moves by some Australian states to criminalise ‘wage theft’. Several high-profile cases involving major Australian organisations have placed a spotlight on employee underpayments, which are investigated by the Fair Work Ombudsman.

It is important that businesses employing Australian employees who are subject to the rules laid out in modern awards actively monitor their legal obligations and manage their risk exposure. If not managed appropriately, employers could potentially be exposed to not only significant financial or reputational risks but also criminal. In this article, we provide some insight on how organisations can mitigate associated risks.

What Is the Risk? Why Does It Occur?

Modern awards are industry or occupation-based and provide a safety net of minimum employment related entitlements. There are currently 155 modern awards, each setting out multiple clauses on various employee entitlements. In some instances, a business may be subject to multiple modern awards for different employees. Enterprise agreements are tailored to individual businesses and are required to place an employee in a better overall position as compared to relevant award(s).

The combination of modern awards and enterprise agreements can result in a highly complex set of rules. Added to this are the challenges of adapting a payroll system to the complex rules and operational rostering challenges. If the rules are not interpreted correctly in the payroll system, employee entitlements could be misclassified, resulting in the payment of incorrect amounts (i.e. under or overpayments).

Read the full article here.