Are you being underpaid? Are you underpaying your staff?

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By Nikita Barsby and Lauren Wright

Fair Work Ombudsman Audit

The Fair Work Ombudsman (FWO) recently conducted an audit of businesses throughout the eastern states of Australia which found that 72% of the businesses had breached workplace laws.[1] The audit resulted in the recovery of $471,904 for 616 workers across the 234 businesses audited. The most common breach was an underpayment of hourly rates, followed by non-existent or inadequate employment records.

“72% of businesses had breached workplace laws”

High-profile Examples

One very current example of an employer who has been found to be underpaying their employees is Lush Australia. Last month, Lush launched a $2 million back payment scheme after admitting that they had underpaid up to 5,000 employees over an 8-year period.[2] The explanation for the underpayment was an outdated payroll system that did not automatically apply the award rates. The company has pledged to invest over $1.5 million to digitalise past timesheets.

Late last year, celebrity Masterchef judge George Calombaris offered an apology to more than 150 employees throughout his restaurant group who had been underpaid to a total of up to $2.6 million, after an external audit uncovered systemic underpayments.[3]

Situations such as these commonly arise in circumstances of rapid business growth, with internal processes and procedures failing to keep up.

While an employer may not intend to underpay their employees, there can be serious consequences including penalties and reputational damage to the business.

For employers

Not only is this a reminder to employers on ensuring they are correctly paying their employees in line with current minimum wages and penalty rates, it is also a reminder to ensure up to date payroll systems and compliance with record keeping obligations under the Fair Work Act 2009 (Cth) and Regulations.

If you are unsure whether you are paying your employees correctly and complying with your record keeping obligations, it is prudent to seek legal advice.

MDC Legal can assist to review employment contracts, relevant award or enterprise agreement and advise on employee entitlements, as well as record keeping requirements.

For employees

It is important to check that you are being paid correctly by comparing your wages to the minimum payable under the Fair Work Act, relevant modern award or enterprise agreements.

MDC Legal can advise employees on their entitlements and potential courses and causes of action to pursue unpaid entitlements including underpayments.

[1] Fair Work Ombudsman, ‘FWO’s Food Precincts campaign returns $471,904 in wages owed to hospitality workers’, 11 July 2018 <https://www.fairwork.gov.au/about-us/news-and-media-releases/2018-media-releases/july-2018/20180711-food-precincts-mr >.

[2] Australian Broadcasting Corporation, ‘Lush Australia admits it underpaid staff by $2m, payroll errors could affect 5,000 employees’, 17 July 2018 < http://www.abc.net.au/news/2018-07-17/lush-cosmetics-admits-it-underpayed-staff-two-million-dollars/10002750>.

[3] Australian Broadcasting Corporation,  ‘George Calombaris apologises after restaurant empire underpays staff up to $2.6m’, 4 April 2017  <http://www.abc.net.au/news/2017-04-04/george-calombaris-apologises-after-restaurant-staff-underpaid/8412852>.