Employers: Wages and Payroll Auditing

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Employment Agreement, Wage and Payroll Audit

There has been a “huge shift” in public attitudes towards wage underpayment or, as its been termed by some parties “wage theft”. As well as this public shift – the Federal government are now preparing to introduce tough new laws to criminalise underpayment.

Fair Work Ombudsman Sandra Parker is outraged about just how many companies have failed to properly classify workers, pay their overtime and penalties, or meet superannuation contributions. Ms Parker is especially angry with Woolworths and the recent 300 million short in Woolworths employees wages. In the Ombudsman’s view, Woolworths’ failure to inform and co-operate has torpedoed the regulator’s trust.

Australia has never had a criminal system in workplace relations however due to the current long list of Corporations short changing employees and by some deemed as “wage theft” such a system is now being entertained and has  become a key agenda on the Governments priority list.

Reasons or root causes for such occurrences often vary but the main ones are:

  • Lack of understanding in employment law and employment agreements by those that administer them,
  • Lack of experience and awareness of the Australian Industrial Relations Framework by managers,
  • Incorrect interpretation of awards, allowances, working hours and other,
  • Acting on instructions from senior staff who refuse to acknowledge that employment law exits,
  • Acting on instructions coming from misinformed internal and external advisors and consultants,

There are many different forms of possible payroll errors and wage thefts that include:

  • Paying under-award wages,
  • Failing to pay superannuation;
  • Failing to pay for breaks,
  • Failing to pay overtime,
  • The compulsory use of employer-provided staff accommodation or others to claw back wages,
  • Withholding of wages on the basis that it will put visa status at risk,
  • Not paying for trial or training periods,
  • Misclassifying workers as independent contractors when they are employees,
  • Not paying personal, annual or paid leave,
  • Not paying appropriately for higher duties,
  • Failing to meet basic worker entitlements in family run businesses,
  • Phoenixing-type activity, where a firm goes into administration or liquidation to avoid having to pay employee entitlements, then re-emerges under a different legal structure but with the same or related individuals in control,
  • Inappropriate deductions from workers’ wages such as inflated rent, transport costs or uniforms,
  • Charging employees for PPE,
  • Paying ‘all-inclusive’ flat hourly or daily rates without considering allowances and other entitlements,
  • Non-payment of shift allowances,
  • Failing to deduct or remit taxation amounts,
  • Requiring the employee to pay an ‘employment bond,
  • Failing to pay for ‘on call’ work periods.

Incorrect payroll setup (payroll errors) can occur very easily. The main courses are likely to be:

  1. Incorrect information flowing from HR to Payroll,
  2. Set and forget payroll departments that site separate from HR
  3. Incorrect initial payroll system setup and thereafter – incorrect processing
  4. Poor payroll software and systems making accurate payroll difficult to administer

Don’t become another Company prosecuted by the Fair Work Ombudsman and end up on the ‘Wage Theft’ wanted list. Your long and hard earned reputation is much more valuable than “FOR A FEW DOLLARS MORE”.

Contact the Employment Advocate today to arrange an Employment Agreement, Wage and Payroll Audit and avoid a muddied reputation.