It is rare for employers to deliberately underpay their workers, but it is also rare that businesses get it right.
Ignorance, however, is not a defence, warns Legal Practice Director Meg Crawford of Ai Group Workplace Lawyers.
“I’m yet to encounter one employer who does it on purpose,” Ms Crawford said.
"In most cases, underpayments are not deliberate. They are frequently the result of payroll errors or inadvertent misapplication of awards or enterprise agreements. The underpayments range from being really significant through to cents out.
“In my experience so far, it’s always been inadvertent, but that’s not a defence.”
Confusion over awards is not uncommon.
“Businesses might think employees are covered by a certain award whereas in fact they’re covered by a different one,” Ms Crawford said.
“Or they consider some employees award-free and they’re not. For instance, there are a lot of awards that do cover roles that you might think would be award free, including up to middle management and even higher. These include the Professional Engineers Award and the Social, Community, Home Care and Disability Services (SCHADS) Award.”
Another common issue is payroll error.
“For instance, where a business has accidentally not paid someone for a public holiday,” Ms Crawford said.
“These are things that can be quickly tidied up.”
Ms Crawford said businesses need to be aware of the penalties and underpayment obligations that can follow.
“If a company does become aware that they are underpaying, it’s really important not to ignore it or bury your head in the sand,” she said.
“If an employer is on notice that it’s underpaying, and does nothing about it, the penalties instantly go up, so it is important that if an employer knows or suspects that people are not being paid properly, don’t just do nothing in the hope that it might go away. That’s a dangerous attitude.
“I’ve yet to come across an employer who has got it absolutely right. I’d encourage businesses to conduct a spot check at least biannually to see if they are paying their people accurately.
“That way, a business could put its hand on its heart and say: ‘We’re using our best endeavours to pay people properly’.”
Repercussions range from orders to backpay and fines all the way through to jail for the new wage theft provisions.
“The ramifications are potentially so big that businesses should audit and check regularly,” Ms Crawford said.
“Prevention is always better than the cure.
“Plus, the underpayment cases thus far have been very high profile. The prospect of bad publicity is huge and that could have an impact on shareholder stakes.
“So, it's wise to seek the advice of specialist employment lawyers who are skilled at identifying and remedying underpayments. This can preserve the integrity of the business and help ensure that workers are being paid appropriately."
For further information, please phone our Workplace Advice Line on 1300 55 66 77.
Wendy Larter is Communications Manager at the Australian Industry Group. She has more than 20 years’ experience as a reporter, features writer, contributor and sub-editor for newspapers and magazines including The Courier-Mail in Brisbane and Metro, the News of the World, The Times and Elle in the UK.
