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A guide for Australian employers to navigate clear of underpayment

A critical concern in today’s business world revolves around the accurate compensation of employees for their work. Individuals must be remunerated for their contribution to their employer’s achievements and in line with relevant pay awards. 

Numerous observers have quickly seized upon each fresh revelation, levelling charges of corporate fraud and executives paying themselves millions at the cost of their workforce. However, the reality is considerably more complex and significantly less sensational than this. 

Understanding the size of the issue 

The issue of wage theft is a growing concern for both employees and employers across various industries. Estimates by PwC says that wage theft cost the Australian economy approximately $1.35 billion in 2020. To put this into perspective, this is enough to build several new hospitals or fund critical infrastructure projects. To tackle this serious problem, it’s essential to look at the sectors most at risk. 

Accommodation and Food Services (~$190 million): This sector includes businesses like hotels, restaurants, and cafes. Wage theft in this industry is not only ethically problematic but also significantly impacts the livelihoods of many low-wage workers. 

Construction (~$320 million): The construction industry, known for its complex labour requirements, faces challenges related to overtime, penalty rates, and ensuring accurate employee payment. 

Healthcare and Social Assistance (~$220 million): In a sector where workforce management is critical due to shift work and patient care, wage theft can lead to severe repercussions, including understaffing and reduced quality of care. 

Retail (~$180 million): Retail businesses, often characterised by high turnover and varying work schedules, are particularly susceptible to wage underpayment issues. 

Recent cases of wage theft in Australia 

In recent years, it’s been impossible to miss the headlines about the underpayment of workers’ entitlements in Australia.  

The mining sector is no stranger to wage theft, with mining giant BHP having been caught out with one of the biggest underpayments in corporate history. BHP’s issue appears to have stemmed from errors over basic employment standards. The company had incorrectly deducted public holidays as leave for more than 28,000 employees.  

The utility sector is also an industry that has commonly reported underpayment of its workers, with its employees often working at remote sites. One of Australia’s largest water distributors has confirmed it underpaid workers by $21.3 million over seven years. While reviewing historical issues, they discovered it had incorrectly and unintentionally underpaid over 1,500 employees. 

Many Australian workers have found themselves underpaid by the major banks, supermarkets and healthcare giants, resulting in the loss of millions of dollars in rightfully earned wages, including The Commonwealth Bank, Suncorp, Australian Unity and Woolworths. In these cases, technology systems have often been blamed for the underpayments due to the complexity of reward rates, public holidays and superannuation. 

The role of technology in addressing wage theft 

In wage theft cases, some organisations have blamed system set-up errors, rostering and manual processing errors, incorrect interpretation of obligations, inadequate training and poor payroll processes. 

Addressing wage theft is a moral obligation and a legal requirement for Australian businesses. Organisations must leverage technology to implement fair and transparent compensation practices to avoid underpaying their workforces.  

Implementing an advanced workforce management platform, which includes time and attendance software with award interpretation capabilities, can help avoid situations of underpayment and non-compliance. 

 Modern time and attendance software can accurately track employee work hours, reducing the risk of human error in manual calculations. This ensures employees are paid for their time, including overtime and penalty rates. 

 Workforce management platforms provide tools to ensure that businesses comply with relevant labour laws and regulations. They can be customised to cater to the specific needs of industries, minimising the risk of non-compliance and wage theft. 

 Efficient shift scheduling improves productivity and aids in fair compensation. Workforce management platforms allow businesses to create schedules that align with labour laws and reduce the chances of underpayment. 

 Your solution should offer real-time reporting capabilities, enabling employers to identify employee-hour discrepancies and take immediate corrective action. This transparency builds trust among employees. 

Payroll Integration: Seamless integration with payroll systems ensures that the data captured is accurately reflected in employee payments, eliminating wage theft and reducing administrative hours. 

Employee Self-service: Workforce management platforms often come with employee self-service portals that allow workers to track their hours and view/update their personal information, ensuring transparency and up-to-date employee details. 

Conclusion 

The issue of wage theft in Australia is an ethical and financial concern affecting businesses and their employees across multiple sectors. This demonstrates why employers should prioritise workplace compliance and ensure their systems and processes meet all requirements of relevant awards or agreements. When breaches are not picked up quickly, they can lead to a substantial back-payment bill and significant reputational damage that can not only impact their ability to recruit new employees but also affect customer goodwill. 

Organisations can streamline operations by investing in advanced workforce management platforms and time and attendance software, ensuring fair and transparent employee compensation. In doing so, they take a significant step towards a more equitable and responsible business environment, where wage theft is a distant memory.  

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