An employee has been underpaid when the employer fails to pay them the minimum amounts including allowances, as set out in the relevant award or agreement. Incidences of underpayment are continually emerging, from big businesses such as ABC, Qantas, and Woolworths, as well as small businesses across the country. Employers are either self-reporting or being called out for underpaying employees in a range of ways. These may include misclassifying workers or failing to pay overtime, loading, penalty rates or superannuation correctly. Such errors may have many possible causes, such as inadequate understanding of employee entitlements, insufficient payroll processes, lack of auditing, poor timekeeping practices or overall complacency.
Given the frequency and severity of incidents, underpayment has become a strong national focus, as evidenced through media attention. The Fair Work Ombudsman has expressed that businesses will not be given leniency in such matters, even if the matter is self-reported. In addition, there are calls for the Federal Government to address the issue, possibly by imposing criminal sanctions for extreme instances of wage theft. It is vital that employers keep up to date with wage increases and engage in regular review to ensure they are paying their employees correctly, as a small non-compliance can create a substantial liability if left unnoticed over a long period of time. The system of employee entitlements is complex and even large employers with dedicated experts make mistakes. Contact M+E to ensure your employment procedures meet the legal requirements and avoid potentially severe consequences.