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Employers – Be Careful!

There has been a number of high-profile businesses in the media recently for the wrong reason. They have been accused of underpaying their staff including television celebrity chef George Calombaris’ restaurant group who back-paid workers $7.8 million in wages. More recently, supermarket giant Woolworths has admitted underpaying about 5,700 of their salaried staff an amount in the range of between $200 million to $300 million. The underpayment dates back as far as 2010.

These large employers join a long list of major corporates who have been found to have underpaid their staff. The list includes Wesfarmers, 7 Eleven, Qantas, the Australian Broadcasting Corporation (ABC), the Commonwealth Bank, Super Retail Group and Michael Hill Jewellers. 

But how can this happen?

Payroll in this country is complex with more than a hundred awards to interpret. Within each award there are various pay rates including ordinary time earnings, overtime, penalty rates, public holiday rates, weekend rates, shift allowances and travel allowances. When setting up an employee in a computerised payroll system you need to understand these rates and various allowances. Groups like the Council of Small Business Organisations Australia (COSBOA) and the Australian Retailers Association (ARA) have argued workplace laws are too complex and need to be streamlined but don’t hold your breath on any changes.

For a small business owner with a single employee there’s no excuses. They must follow a number of steps when onboarding an employee including ticking the right boxes in their payroll software. There are check boxes for things like an existing HECS debt, various leave entitlements and superannuation calculations. When things go wrong employers tend to blame the software, but the program is only processing the data that is entered into the system. Tick the wrong box and you could innocently trigger a series of underpayments until you or the employee detects the issue. This could be weeks, months or even years later like the Woolworths case.

So, what is the message for small business owners?

We run the payroll for some of our clients and we have checklists in place and review employment agreements for new staff members. We also review timesheets and run reconciliation reports to cross check the data. It’s certainly not just a simple ‘tick and click’ process.

The Woolworths case highlights the fact that most employees don’t even know they are underpaid because they trust their employer will get it right. Ultimately the onus is on the employer to get it right and a series of raids initiated by the Fair Work Ombudsman (FWO) detected a high level of ‘wage theft’ in regional Victoria and NSW. The FWO has revealed some disturbing results from this series of inspections conducted in the Albury/Wodonga, Ballarat and Wollongong regions:

  • Just under half (47%) of the 489 businesses that received surprise visits (including retail outlets, takeaway shops, cafes and bars) were in breach of Workplace Laws.
  • Over a third (35%) of audited businesses were found to be underpaying workers their minimum hourly rates, while 12% weren’t paying correct penalty rates.
  • More than half (63%) of employers audited were “unaware” of all applicable workplace relations obligations, 15% had “misinterpreted” award requirements and 9% stole wages because of a “business decision” such as paying a flat rate.
  • Wage theft was the most common breach identified by FWO inspectors followed by record-keeping failures.

The Fair Work Ombudsman Sandra Parker said, a “lack of awareness” was behind the majority of non-compliant cases with employers paying fines totalling more than $30,000.  Parker went on to say, “Australia’s minimum pay rates are not negotiable, and employers in the fast food, restaurant and café sector need to actively check that they are paying their staff correctly”.

The moral of the story is you have clear responsibilities as an employer and the right software is absolutely critical. Have a clear onboarding process for your staff and if you have any queries about your payroll or software please don’t hesitate to contact Opulent Accountants.

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Moumita Ghosh
Moumita Ghosh
2020-11-18
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We've been meeting Dayan for years now and he is great with his advice and is very knowledgeable and pragmatic. We recently used his services to get the home loan for our house and he and his team went above and beyond to get us the best possible deal. Ishara in his team was super communicative and responsive in following through and made the process very easy for us. Highly recommend them!
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Cara Neela
2020-10-24
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Dayan and Hasi are wonderful, wouldn’t hesitate to recommend them! They went through all with a fine tooth comb to ensure all was correct. Thanks to you both and the Opulent team!
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2020-09-29
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2020-09-08
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2020-09-03
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Ronald Turner
2020-07-16
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Milinda Wickramasinghe
2020-07-05
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Opulent team has been fantastic and it has been truly a pleasure dealing with the team for more than 10 years. Dayan and Ishara have gone above and beyond to assist and communicated with me even when I was overseas. Excellent service has being provided in a professional and timely manner. I would highly recommend the team.
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Chami Ranaweera
2020-04-28
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I have been working with Dayan last 9 years. All of my loans, refinance and tax are done through Opulent.Dayan and his team including Ishara are very helpful and easy to deal.
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Edmund Lobo
2019-12-02
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We were new entrants to the cattle farming scene. All the rules and regulations surrounding primary production can be very confusing. The team at Opulent Accountants walked us through all the steps, set up the necessary ABNs and Company / Trust accounts, filed the related pending BAS and Tax returns, and is currently keeping us up-to-date with all ATO related transactions. We recommend them highly to all.