In July 2021, the Victorian Government made wage theft a crime , meaning employers who deliberately and dishonestly underpay employees or withhold employee entitlements could face large fines and potential jail time. Now the new Labor Government in Canberra is focusing on federal wage theft laws too, having taken the policy to May’s federal election.
As expert business consultants, BlueRock’s advisors across law and bookkeeping understand the challenges around getting award classifications and payroll right. We work with hospitality businesses to help them understand hospitality award rates and how to classify staff under the correct award wages.
In this article, we look at how to classify employees under the right awards, how to ensure your payroll is in order, and how to avoid creating a relationship of distrust with your staff. The objective is for you to be compliant and avoid facing charges of wage theft in Victoria, or Australia-wide if federal wage theft laws are enacted..
Classify Employees Under The Right Award
Have you classified your employees correctly? Do you know how? Awards are notoriously difficult documents to work with and you have to know what you're looking for to avoid underpayment of wages or inadvertently withholding of entitlements. While the Wage Theft Act deals with deliberately and dishonestly withholding employee entitlements, there is a fine line between negligence and wilful dishonesty. If a failure to correctly classify does not amount to wage theft it may still constitute a breach of the relevant award and the Fair Work Act 2009 (Cth) both of which attract civil penalties.
Paying staff above their award wage is not a get out of jail free card for employers. There is still a range of compliance required by awards where you decide to pay above the award to cover all award entitlements. It’s also essential that each year you assess every employee’s benefits against the award minimum entitlements to ensure the worker has not been underpaid. This includes allowances, overtime, leave loading, penalty rates and more.
A major risk for employers is incorrectly classifying employees under an award. This can happen at the beginning of the employment but also where the employee’s role changes over time. In many small businesses, employees take on a range of tasks that could see their role classification change or fall under a different award. For example, if you have an employee who started as a waiter, but their role evolves to include managing the business’s finances, the employee’s classification will change which would include a change to their hourly rate and entitlements. It is important to remember that changes to an employee’s role happen over time and sometimes without either party really noticing. This is why regularly reviewing your employees’ position against their award classification is essential.
Create a Relationship of Trust
Millenial and Gen Z employees are leading the way in understanding and advocating for their workplace rights and pay entitlements. With access to a multitude of social media platforms at workers' fingertips the impact of underpaying (whether intentional or unintentional) is no longer merely an in-house problem. In 2015, a high profile case against Grill’d made national headlines , after a 20-year-old worker contacted her union and lodged a claim with the Fair Work Commission (FWC).
Another high-profile hospitality award wage scandal involving George Calombaris’s Made Establishment Group arose after one employee was found by the Fair Work Ombudsman to have been underpaid because of a problem with the company’s payroll system. The saga culminated in an admission of underpayment of $7.83m in wages to 515 employees.
Our point being? When doubt creeps in among your employees regarding classification, underpayment of wages or withholding of entitlements like superannuation, things can go downhill fast. If an issue arises with one employee, it can trigger a domino-like effect with other staff researching their awards to ensure they have been classified and paid correctly. Alternatively, the Fair Work Ombudsman may commence an investigation. Either way these are all problems for which prevention is far better than the cure.
Even an honest mistake can have a significant impact on team morale and business performance, as public opinion can change quickly and all your hard work building a team and brand can evaporate.
Get Your Payroll Processes in Order
One payroll error can raise the alarm among your employees, but it can also put you on the radar of the FWC for years to come. Like getting audited by the Australian Taxation Office if something isn’t right with your books, the FWC may take an interest in your business if you make mistakes paying super, leave entitlements or wages.
BlueRock’s bookkeeping and payroll services cover the full end-to-end payroll process, including pay runs, payslips, timesheets and leave, payroll tax and reporting, year-end reporting and more. Get access to detailed knowledge and advice, including payroll audits, to make sure your business is compliant with the national regulations and able to navigate the maze of wage categories and award classification and conditions.
If you think you’ve made a mistake or your payroll processes aren’t up to scratch, BlueRock’s payroll experts and employment law team can help you get it right. If you’ve made a mistake, or even think you might have, follow these steps ASAP.
It’s also important to note that insurers do not indemnify in cases of underpayment. They may only cover legal costs, not the fines (which in Victoria can be up to $1,090,440 for companies) or the repayment of wages.
Be Proactive About Award Interpretations and Payroll Procedures
If you think you might be accidentally underpaying your staff or haven’t classified them correctly, you can minimise the risk of penalties if you are proactive and sort it out. Whether it’s a payroll problem, a legal issue regarding workplace agreements or both, BlueRock’s multidisciplinary team will work together to get your business back on track and you back to concentrating on achieving your business goals.
If you’re not compliant, we’ll work through the issues with you to fix any legal problems and ensure compliance. Get in touch with one of our employment lawyers today to discuss your business.
