1 min read

Time to act on underpayment risks

By Kelly Godfrey

With the Federal Government seeking to criminalise wage theft, taking action to minimise the risk of underpayments has never been more important.

In addition to the employing entity being liable for underpayments, so can individuals. The consequences being hefty fines, imprisonment, reputational damage, difficulty in attracting good employees and potential impacts on profitability with consumers not wanting to be associated with such brands.

The complexity of Australia’s employment laws makes underpayment of wages a significant risk. Many employers have written contracts of employment with their employees that outline terms and conditions of employment. However, in addition, employers must comply with any relevant modern awards (with terms and pay rates being varied by the Fair Work Commission), any applicable enterprise bargaining agreements and relevant legislation. Sometimes these instruments can be complex, and difficult to understand and apply.

Strategies to reduce underpayment risks include:

  • educating yourself on the employment terms and conditions that govern your employees’ employment;
  • seeking advice if you are unsure what industrial instruments apply;
  • investigating AI technology and payroll systems that can now assist in undertaking a wages audit;
  • training management about the importance of maintaining up-to-date records of employment status, position, classification and pay rates;
  • reviewing your systems and the information contained about your employees’ pay and conditions at least annually;
  • being alert to amendments to relevant awards and legislation; and
  • listening to, and investigating, any employee complaints about underpayment issues, and if they have inadvertently occurred, then promptly rectifying them.
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