Do you know if you’re Underpaying your Staff?

In recent months, there has been much chatter about wage theft by many Australian businesses, no matter the size; small, medium or large, as a result of employees being short paid due to employers not understanding allowances, shift penalties and so on.  Businesses have been named and shamed in the media and the Australian public have voiced their collective disapproval, showing that the “True Blue” spirit is still alive and well.  But did you know that there are other ways in which employees can also be underpaid?  One such way is when employees are asked to open or close the business and are not paid for the time spent doing so. 

Employees must be paid for all hours that they work, not just the hours that have been nominated as their normal working hours.  For example, Jane, who works in a jewellery store works from 9.00 am to 5.00 pm but she actually arrives at work at 8.30 am to open up the shop, unlock the safe and set up the products in the display cabinets.  Jane also stays back until 5.30 pm to put the products back into the safe, count the till money and to lock up the store.  Therefore, Jane needs to be paid from 8.30 am to 5.30 pm which could include overtime depending on how many hours have already been worked for the day and week. 

Another classic example of wage theft is when an employer recovers money lost due to fraud or employee’s mistake. An employer cannot deduct money from an employee’s pay if the till is short for example.  This would benefit only the employer and would be deemed an unreasonable circumstance as per the Fair Work Act.  Any monetary loss would need to be met by the employer.  The business should have insurance to cover for such loss or alternatively, cover the loss themselves. 

What about in scenarios where you have employees who have damaged/lost stock?  You cannot deduct money from the wages of your employees to reimburse the business for any loss or damages.  You can discipline employees who have damaged/lost stock by the negligent action.  All incidents would need to be investigated prior to any decision being made to allow for a fair process (best HR practice).  Any losses will need to be covered by the employer as outlined in section 325 of the Act which prohibits employers from asking for employees to reimburse the company either directly (via wages) or indirectly (payment made to the company). 

This would also be the case, even if you have a clause in your employee contracts stating that you will deduct from your employee’s wages to reimburse for any loss/damage of property.  When writing employee contracts, it is best to seek legal advice to ensure that you are compliant with the Act. 

 The above examples are some of the examples as outlined in the Fair Work Regulations 2009.

Did you know that less than 30% of Australian companies are compliant and 50% of these are as a result of payroll issues, ie pay their employees incorrectly?  Most employers are not deliberately underpaying staff and many have absolutely no idea that they are in fact short paying their employees.  As the above statistics show, many employers don’t understand payroll enough to know that they are short paying their employees.  This is very concerning.  Could you be one of these companies? 

Check if your employment contracts, time, attendance records and payslips show that you’re compliant with today’s standards. Don’t wait until you get a 24-hours notice from Fairwork Commission that requests to inspect your employment files, record keeping and asks for evidence that you’re paying the right award and pay rates that are linked to staff rosters. 

If you are unsure if you’re compliant, contact one of our HR specialists at Key Business Advisors who will be able to guide you through this difficult minefield and to help you avoid being one of the many businesses who short pay their employees.  It could help you from breaching the Fair Work Act.