Tales of major enterprises making significant staff underpayments have been attracting much publicity in recent years. The offenders include some of Australia’s biggest employers, such as the Commonwealth Bank, National Australia Bank, Woolworths, Bunnings, Qantas, Michael Hill, Bupa and 7-Eleven. It’s not surprising that a PwC report in 2020 estimated there were around $1.35 billion worth of staff underpayments every year in Australia.
What’s the cause of wage theft?
It’s important to emphasise that most underpayments are not deliberate attempts to defraud employees. Employers can make underpayments because of complex awards with penalty rates, annualised salary provisions, and even notification requirements for change of roster, which all vary across industry sectors, creating a carnival of risk for employers.
Regardless of the cause of the underpayment, the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 contains ‘reverse onus’ provisions that mean the employer must disprove that there has been an underpayment, regardless of whether the complainant worker has trustworthy evidence of underpayment.
When wage theft is a crime
In June 2020, Victoria become the first state in the country to pass laws establishing criminal penalties for employers who deliberately underpay or don’t pay their workers. In September 2020, the Queensland Government passed laws making it a criminal offence for employers to underpay workers deliberately and systematically. At the time Queensland’s Industrial Relations Minister Grace Grace said that wage theft affects one in four Queensland workers.
In April 2021, Damien Tudehope, the NSW Minister for Finance and Small Business, introduced new laws designed to crack down on companies who avoid their payroll obligations, the Combating Wage Theft Bill 2021, which is still before the NSW parliament.
At a federal level, in March 2021 proposed wage theft provisions were dropped from the Fair Work Amendment Bill 2021, leaving states and territories to choose how to deal with wage theft themselves.
Employers face prosecution
Although these laws are designed to target those employers who deliberately steal from their workers rather than those making honest mistakes, it’s a fine line between underpayment and wage theft. Payroll workers could potentially face prosecution if they intentionally assist their employer to steal wages and entitlements or falsify payment records.
John Howe, Director of the University of Melbourne School of Government was quoted by HRM Online in July 2019: “The corporation itself can’t be put in jail, so who should be held to account for criminal penalties? It can be difficult to prove who arranged the underpayments … In a corporate governance structure, it’s the directors and senior managers who are ultimately responsible for what’s being done at all levels of the company.”
Aurion offers you a wealth of publications and checklists to help you deal with the spectre of underpayment. Download our white paper, BULLSEYE: Your Definitive Guide to Underpayments, and read our blog Avoiding the Underpayments Minefield: A Guide for Payroll Managers
