Underpayment of wages by major companies has led to a term being coined “wage theft”. In particular, there has been a push by Unions as well as the Federal and State Governments to put in place criminal penalties for underpayment of wages – wage theft.
Made Establishment (George Colambaris)
Super Retail Group
All the companies above have experienced issues in regards to underpayment of wages – a previous article we prepared discussed the implications of Woolworths and Made Establishment and Chatime around underpayment of wages.
Current Underpayment of wages laws
To recap, the current laws in place, an underpayment of wages will usually come in two ways – one out of contract and the other through the non-compliance of a modern award. An underpayment under a contract is relatively simple to understand, that is, an employer incorrectly pays either through having a poor accounting or payroll system, a mistake or even reckless behaviour which has led to an underpayment of what they are entitled to under a contract of employment. There are of course instances where an employee is deliberately underpaid or the more usual circumstances where a bonus/commission (which is not necessarily discretionary) is unpaid.
For many reasons, a breach of contract claim can be quite difficult.
The other more usual breach is the failure to comply with a modern award. Usual underpayments or non-payments include but are not limited to the following:
- Leave loading
- Not taking into account modern award rate increases
Keep in mind, if there are breaches of the award or Fair Work Act 2009 (Cth) (FW Act) due to underpayment of wages the Employer will be liable for backpayment as well as penalties of up to $63,000 per breach. Significantly, individuals involved in the breach such as directors, owners and managers, and internal accounts teams could also be liable for penalties of up to $12,600 per breach.
Currently, the Fair Work Ombudsman has the power to pursue individuals involved in a breach by way of s 550 of the FW Act. Wage theft goes a step further and exposes individuals involved in the breach to criminal sanctions. The Attorney General Christian Porter is listening to a range of further measures under the band of wage theft including:
- Empowering the FWO to pursue banning order applications against Directors (in particular)
- More resources for the Fair Work Commission to deal with underpayment of wages matters in a more efficient way – as opposed to the Federal Court or Federal Circuit Court
- Criminalisation of wage theft
The Queensland Government are taking a very proactive approach and after the recent enquiry will likely introduce laws to amend the criminal code so that wage theft is liable to a maximum imprisonment of 10 years. They are also investigating the possibility of utilising the Queensland Industrial Relations Commission (QIRC) as a possible way to quickly deal with wage theft issues as opposed to the Federal Court or Federal Circuit Court. If passed this will allow Unions and employee advocates and lawyers a much easier path in underpayment of wages claims.
Employers need to ensure compliance with the various issues around underpayment of wages – we suggest Employers undertake the following as a minimum:
- Understand the Award coverage of all employees – if employees are covered by an Award or not covered by an Award
- If an employee is Award covered – take into account the recent annualised salary changes – a checklist has been prepared here.
- All Employers should undertake a wage review to ensure complete compliance
- Ensure contracts are up to date and if they are outdated or need refreshing have a variation sent out to the employee
- Ensure accounts and payroll systems are up to date – if you don’t have one – get one – if you have one ensure the “rules” around the payments are correct
- Keep written records of the steps taken – it may well come in handy if the FWO or a Union come knocking
If you want more information about wage theft or underpayment of wages, please call us on 07 3876 5111. We also provide an obligation free consultation for all employers.
About the Author
Jonathan Mamaril leads a team of handpicked experts in the areas of employment law and commercial law who focus on educating clients to avoid headaches, provide advice on issues before they fester and when action needs to be taken and there is a problem mitigate risk and liability.