Avoiding Payroll Scandal and Wage Theft in Australia

In recent times, the Australian payroll scene continues to be trailed by several wage and payroll scandals as Fair Work Ombudsman gets a ton of complaints on a regular basis. The scandals, of course, have a huge negative impact on a significant number of employees. Not only that, but such scandals have also led to several lawsuits where some employers were fined while employees got compensated.

Underpayment has become a systemic issue that has forced many states to criminalise scandals and thefts around wages in 2020. Even with that, things are yet to take the right shape, following the increasing number of businesses that have been pinged for ripping off their employees.

For employers, compliance with payroll processes may be a bit challenging. However, it is not optional and any form of non-compliance to such processes comes with significant financial and reputational consequences. Therefore, this article will keep you informed on why payroll compliance is crucial and how you can make sure that you abide by all the rules.

Companies Inside the Hot Pool of Payroll and Wage Scandals in Australia

Many Australian companies caught in the web of shortchanging their workers have come under the intense fire of the Fair Work Ombudsman. Some of them are listed here:

  • The Merivale Group

In 2020, The Merivale Group was faced with a class-action lawsuit where it was accused of underpaying several employees thousands of dollars for many years.

  • The Australian Broadcasting Corporation

In 2019, ABC admitted to underpaying 2,500 casual staff over the past six years. This, according to it, was caused by errors in calculating penalties, loadings, and allowances for flat-rate casual staff.

  • Super Retail Group

Super Retail Group is currently facing a second underpayments issue which will cost it up to $43 million if found guilty. This is after its admittance to underpaying its staff up to $7.9 million in 2020.

  • Qantas Airline

Qantas Airline seems to be enmeshed in a form of ‘scandal’ that takes an entirely different turn. While it underpaid some employees by thousands of dollars each year, it was overpaying a few others by thousands of dollars. 

  • 7-Eleven

Apart from the aforementioned payroll scandals and several others, there are also a considerable number of scandals involving wages. Just recently, there was the 7-Eleven “cash-back” wage exploitation which forced many workers to withdraw and return a part of their pay. There are many more scandals but just to name a few.

Errors that cause Payroll Scandals

Usually, some payroll scandals are a result of mistakes and complexities in Federal- and State-based legislation on employee awards in Australia. Findings reveal that some clauses in various legislation are yet to get clarified. This excludes the regular legislative change factor that often obfuscates legislation.

Other payroll mistakes that often lead to scandals are associated with inadequate training being given to payroll managers. Payroll managers are responsible for paying employees in tandem with the law. However, they are not given adequate training, resulting in some errors that often lead to scandal.

Some companies also fail to observe rules on overtime, as established in employee awards. The provision states that employees are entitled to at least 10-hour breaks between shifts and must be paid overtime rates if the break is less than 10 hours to compensate for break time not utilized. However, this comes under awards that govern employees in hospitality, aged care, and social service. Shangri-La Hotel in Sydney was found to have owed up to $250,000, following a review that revealed employees who were not paid full entitlements to overtime penalty rates. Another common error revolves around underpayment on termination. Many payroll managers fail to follow the employee award procedure as established in the Fair Work Act, which entitles employees over age 45 and with a minimum of two years of service with the company to get an additional week of notice upon terminating their services.

Companies, especially within the manufacturing and health support services’ sectors, have been discovered to be paying only the base rate on annual leave payments rather than full payments owed to the employee – including penalties and allowances – if they had worked. Similarly, some employers often exclude commissions, incentives, and bonuses when calculating long service leave value.

Leveraging Digital approach for Payroll Systems

While a few companies have embraced a digital approach to payroll systems to help minimize instances of errors, several others are still grappling with the brick-and-mortar system. Even with the adoption of the digital approach, some companies are still not left out in the scourge. There is the erroneous belief that software will serve as the magic wand that will automatically unravel errors that often lead to scandals.

Though modern systems help companies to automatically interpret awards for the sake of getting the best outcome for themselves and their employees, thus keeping their reputation intact and preventing unnecessary financial implications, it is important that employers take the proactive step of reviewing their payroll processes regularly.

Steps Taken by Fair Work Commission

As part of its yearly review of modern awards, Fair Work Commission mandated employers to assess their existing annualised wage or salary arrangements of employees with modern award obligations. This is contained in the new rules for annual wage arrangements introduced to ensure that employees are adequately remunerated for awards to which they are entitled. It also introduced the better off overall test (BOOT) that measures the agreement terms under which an employee works against the terms stated in the relevant modern award and are to the greater benefit of the employees.

How can we Help?

Wage theft is now a criminal offence and can surely damage a brand’s reputation. Therefore, it is our firm belief that employers seeking to be fully compliant with payroll policies should get the necessary support and information they need. For this, you can check out our guide on what you need to know about matching your payroll with corresponding modern awards.

Getting your pay checked is one sure way of ensuring that you pay your employees what is due to them. And guess what? We can take the complexities away from you to ensure that you are 100% compliant with payroll policies. To get started, all you need to do is to book a free call with one of our experts.