Wage Compliance

Ensure you’re meeting your obligations as an employer

When did you last check your payroll matches the applicable modern award?

Wage Theft is now a criminal offence. Now is the time to act.

“More than $1.2 billion is syphoned out of workers’ pay packets each year in unpaid or underpaid wages and around $1.1 billion in underpayment of superannuation. “

The Bill does not introduce the concept of recklessness, as the stated intent is not to capture employers who act honestly.  Employers who are aware of entitlements owing to their employees, but who fail to provide the entitlements, would be exposed under the provisions.

WHAT YOU NEED TO KNOW

  • Wage theft is a criminal offence in Queensland punishable by up to 10 years in prison for ‘stealing’ and a maximum of 14 years in jail for an offence of fraud.
  • Workers, or a Union on behalf of a worker, can initiate the process by making a complaint to Queensland Police.
  • The process involves conciliation for cases up to $20,000.
  • Workers, or a Union on behalf of a worker, can initiate a civil claim instead, through a new Industrial Magistrates Court if they choose.

WHAT YOU NEED TO DO

  • Now more than ever, employers need to get pays right. This means:
  • Ensuring your staff are being paid correctly under the relevant Modern Award or enterprise agreement, keeping in mind recent changes to Award minimum rates of pay and conditions
  • Be sure to factor in allowances, overtime and other relevant award or enterprise agreement entitlements to ensure you are paying pursuant to an award or enterprise agreement

The Bill does not introduce the concept of recklessness, as the stated intent is not to capture employers who act honestly. So as an employer we strongly advise you to look at your payments NOW and act honestly by amending any underpayments and getting it right going forward.

 

What can we do to help?

Due to the complexity of modern industrial obligations payroll errors are made and frequently. Most underpayments are a result of administrative error, a misunderstanding of the payments required in the Modern Awards, outdated contracts and payments and/or a shortcoming in the payroll system, rather than any deliberate attempt to underpay employees.

If you are concerned that there might be errors in your processes Fresh HR Insights is here to help with our two options for a payroll audit. 

How is BOOT  testing different from Annualised Salary requirements?

Wage compliance is not always about the rate of pay we use to remunerate our employees. The concept of Better Off Overall Testing is not new but the introduction of Annualised Salary arrangements is relatively recent.

A BOOT test involves assessing an agreement to ensure that the terms within that agreement provide better entitlements than the relevant award.  An employer may decide to pay their employees a rate of pay that is in excess of that required under the award. Some terms within the award may be incorporated within the rate of pay and not calculated separately.

A BOOT test may involve the employer testing to ensure that the employee is better off with the terms of the agreement, that may include a higher rate of pay, than the terms of the relevant award which uses a lower rate of pay and the payment of additional entitlements.

An Annualised Salary Arrangement is one where the employer agrees to pay their employees an annual salary which is greater than the minimum wage under the award.

Annualised Salary requirements seek to ensure that employers keep appropriate records for employees and regularly check that an employee has been paid in accordance with the arrangement.

The most common areas to be included and monitored in these arrangements are:

  • Total hours worked including start and finish times
  • Recording of paid and unpaid breaks
  • Regular checks per pay period of outer limits to be applied and payment of excess if required
  • Annual reconciliations to ensure the employee has been paid in excess of the minimum under the award

The Fair Work Commission regularly reviews and updates Modern Awards with new rules for Annualised Salary Arrangements.

If you need help navigating the complex requirements for BOOT Testing or an Annualised Salary arrangement we can help. Just click on the make an appointment button below or review our wage compliance packages.  

Wage compliance services available 

Annual Salary Projection based on an average week

In this audit, we are calculating an estimated salary based on an average week. The award is reviewed to identify relevant penalties and allowances to ensure that you are paying all entitlements as due.

  • Review award to identify relevant penalties and allowances
  • Create audit calculations and provide a written explanation of calculations used
  • One page per employee for sample week x 48 weeks plus 4 weeks annual leave
  • Create an overview page linking to each employee tab for a one-page summary

Additional data required from you: 

  • Sample average weekly hours worked, preferably including the day of the week, start and finish times, (and confirmation of breaks taken) in order to identify applicable penalty rates.

The investment is $175.00 + GST per employee with a minimum payment for 10 employees ($1,750.00 + GST)

Full annual year review based last 12 months calculations

This audit goes into a far greater level of detail as we enter what has been worked every day for the previous 52 weeks, plus the daily award application for those hours worked. We then compare total due to total received.

We will identify as part of our audit additional information that is relevant to you to ensure you have all the facts. As an example, in previous reviews we have identified hours and or allowances such as working away allowances not entered on timesheets but paid. This is not uncommon. To address, in addition to reviewing hour entered on timesheets each week, we review the corresponding payment and amend the timesheet entries to match the hours paid.

Data required in addition to the above request would be:

  • Timesheets for each week of the 52-week period being reviewed stating actual hours worked including day of the week and start and finish times (to identify relevant penalty rates if applicable).
  • Detailed Payroll report for each of the 52 weeks including a breakdown per employee of hours processed and penalties and allowances paid for each of the 52 weeks provided.

As there is a far greater level of detail required the investment is $250.00 + GST per employee with a minimum payment for 10 employees ($2,500.00 + GST). This is an extremely detailed review that takes on average 1-2 hours per employee depending on the availability of reports and the information contained within the reports. The price reflects the time and depth required.

BOOT Testing

What is a BOOT Test?

It is a test the Fair Work Commission uses to assess registered agreements against awards. The registered agreement is compared to the relevant award to ensure the employee is better off overall under the registered agreement in order for it to be approved. If an employer wishes to pay an increased hourly or annual rate you need to do a BOOT test to ensure the rate you are paying is enough to satisfy the terms contained within the award you wish to cover in this increased rate.

To not do so will put you at risk of underpayments.

Data required in addition to the above request would be:

  • Timesheets for each week of a 26-week period are being reviewed stating actual hours worked including the day of the week and start and finish times (to identify relevant penalty rates if applicable).
  • Detailed Payroll report for each of the 26 weeks including a breakdown per employee of hours processed and penalties and allowances paid for each of the 52 weeks provided.
  • If the above is not available (E.G a new starter or new role) the anticipated weekly hours, any overtime required, the out limit of overtime per week expected or that you wish to cover, if leave loading is to be included, what allowances you would like to include and the industry and applicable award (if known) the employee will fall under.

As there is a level of detail required therefore investment is $200.00 + GST per hour with a minimum payment for 3 hours  ($600.00 + GST). The price reflects the time and depth required.

Advice/ Consultation on Awards and Rates compliance

Ad-hoc advice and consultation with our wage compliance team in regards to rates of pay, award classifications, allowances, provisions of ordinary hours within the awards, interpretations of awards, and general questions in regards to wage compliance

The investment for our advice/ consultation is $200.00 + GST per hour with a minimum payment for 3 hours  ($600.00 + GST). Any additional follow-up work will be quoted once the depth of work required is assessed.

The time scale to complete these audits takes between 7-14 days dependant on the complex requirements of your industry and company. We also offer updated employment contracts and a discount will be applied following an audit. Pricing will be advised at time of enquiry.

What risks can you face if you underpay your employees?

Underpayment can lead to legal proceedings being brought by the affected employees or unions on their behalf. The Fair Work Ombudsman can also initiate an investigation and court proceedings for underpayment.

If a court finds you have underpaid an employee in contravention of the Fair Work Act 2009 (Cth) (FW Act), it can order that you make up the underpayment together with interest. It can also require you to pay a penalty of up to $66,600 per contravention (if a body corporate employer) or $13,320 (if an individual). Persons involved in the contravention by a body corporate employer (e.g. payroll officers) may also be separately penalised as accessories to the underpayment.

In EZY Accounting 123 Pty Ltd v Fair Work Ombudsman (2018), an accountancy firm was found to be accessorially liable for a restaurant chain’s underpayments. The firm was the payroll service provider to the employer and was found to be knowingly involved in the employer’s failure to pay its workers the applicable award wage. The firm argued its role was confined to entering data provided by the employer, its client.

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