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Australia’s Wage Theft Scandal, Big Names and Bigger Bucks

by | Dec 8, 2019 | Litigation, Workplace & Employment

Wage theft, it’s the hot workplace topic of the moment with many of Australia’s favourite brands and personalities embroiled in the scandal.

Woolworths is just the most recent of a long list of Australian employers stepping into the underpayment spotlight, with the supermarket chain admitting to underpaying almost 6000 staff up to $300 million. Other employers include Qantas, the Commonwealth Bank and Bunnings, as well as celebrity chefs such as George Calombaris and Neil Perry, and international players like 7-Eleven and Subway.

According to payroll software firm Ascender, approximately one in five Australian workers was underpaid in the past year, equating to around $1.8 billion in unpaid wages. Amidst the public outrage, the Commonwealth Government and industry regulator are coming down hard on what some have labelled as an ‘underpayment epidemic’. Responsive measures include: a recently established Senate Inquiry into wage theft, which will investigate offending companies and consider the most effective methods for recovering unpaid entitlements, the granting of increased powers to the Fair Work Ombudsman (FWO), who will be cracking down on big business offenders, and the planned introduction of tough new laws by the Commonwealth Government, expected to include criminal penalties for the most serious instances of wage theft.

Many underpayment cases are a product of negligent practices rather than deliberate action. According to Fair Work Ombudsman, Sandra Parker, non-compliance with workplace law is typically driven by ineffective company governance and in some instances, complacency. Ms Parker acknowledges that Australia’s industrial law landscape can be challenging to navigate and emphasises that it is therefore essential for employers to educate themselves on workplace rights, entitlements and obligations, and to seek help where it may be necessary.

Preventing an underpayment issue from arising in the first place is not just the right thing to do, it makes good business sense. Fixing errors of this kind can be costly, not only in time, resources and financial penalties, but reputation. In order to prevent an underpayment issue from arising, employers should ensure that they are both aware of and compliant with their obligations under workplace law. These include:

  • Paying the correct wage, as set out in the relevant modern award, an applicable enterprise agreement or the employee’s contract of employment (note this cannot be less than any applicable statutory minimum);
  • Paying statutory entitlements, including annual leave, personal leave and long service leave;
  • Paying the correct amount of superannuation into the elected fund;
  • Correctly classifying employees; and
  • If applicable, paying allowances, overtime and penalty rates.

If your business has underpaid employees it will be prudent to obtain legal advice, especially where underpayments have occurred on an ongoing or what appears to be systematic basis.

The FWO has wide discretion to deal with underpayment claims. As well as facilitating repayment of correct amounts to employees, it can:

  • Mediate disputes between parties;
  • Commence an investigation or inquiry;
  • Issue a Compliance Notice requiring specified action;
  • Issue an Infringement Notice requiring payment of a penalty;
  • Accept an Enforceable Undertaking;
  • Commence Court proceedings.

If you have an underpayment concern or would like further information, our

knowledgeable workplace relations team is ready to help. Contact us today on (03) 9614 7111.