- A string of high-profile cases in Australia have highlighted the prevalence of wage theft and underpayment. Just last week, Woolworths admitted it may have underpaid staff by as much as $300 million. We asked two different employment experts why.
- One claims that employment law is simply too complex for businesses to get right, pointing to a 2018 report found that as many as 72% of audited New South Wales businesses weren’t compliant.
- An employment lawyer on the other hands believes that its prevalence speaks to business complacence due to a lack of oversight and lax prosecution of infringements.
As far as mistakes go, $300 million ones made in your favour are a pretty bad look.
Woolworths’ admission last week that it may have shortchanged workers to that extent over a decade was met with understandable cynicism.
The breathtaking amount comes as Australian industrial relations are having something of a moment.
A string of similar errors has been found this year in other Australian businesses from the likes of Sunglass Hut to the Commonwealth Bank, while fast-food franchises from Subway to Dominos have faced similar accusations. So rampant is the problem in the hospitality industry, we had to limit our list of indiscretions to those businesses headed up by celebrity chefs.
So what is it about Australian employment law that sees workers ripped off time and time again?
A HR software company blames the complexity of Australia’s employment system.
There were more than a few armchair judges throwing the book at the likes of George Calombaris and his Made Establishment for their $7.8 million faux pas earlier this year. Australian startup Employment Hero, however, rejects the notion that cases such as these are the product of greedy owners exploiting their staff.
“If Woolworths is capable of making a $300 million payroll error with all their legal, HR and payroll resources, then you really need to take some pity on the 98% of Australian businesses that are small and medium businesses,” Employment Hero CEO Ben Thompson told Business Insider Australia. “It’s time to address the complexity and make employing people easier and more rewarding for everyone.”
A 2018 Fair Work Commission report that found, nearly three-quarters of New South Wales audited businesses were found to have made payroll errors. Thompson points to the fact that there are 122 different awards and claims there are 33 points at which employers can make a mistake when paying staff.
“Woolworths has been caught out by a count back clause. This means that even though they are entitled to pay people an annual salary that compensates them for working reasonable rosters they also need to retrospectively calculate all actual hours worked against all the relevant modern award or enterprise agreement conditions,” he said. “This is extremely difficult to manage and is frequently overlooked… these things have been a ticking time bomb ever since [they were introduced].”
Given this minefield, Thompson thinks Australia needs to think twice before condemning bosses that have been caught out.
“How can employers be expected to act confidently and proudly when they are constantly being accused of being thieves, even though they are acting in good faith? To be clear this doesn’t mean employees should be paid any less, it’s just that we need to find ways to make employment easier and more rewarding for everyone,” he said.
An employment lawyer claims the problem of underpayment is widespread, not excusable.
Employment law may be demanding on employers, but it’s no excuse for underpaying workers, according to law firm Slater and Gordon.
“There is no reason to accept that complexity of the IR system is the reason for any underpayments by Woolworths,” principal industrial and employment lawyer Carita Kazakoff told Business Insider Australia. “We expect businesses to comply with food safety, liquor licensing, and consumer laws. Industrial laws mandating minimum wages should not be any different.”
The fact underpayment is widespread doesn’t necessarily make it an honest mistake either.
“Rampant wage theft is a result of low levels of prosecution over many years, which has enabled non-compliance to go unpunished and largely unknown,” Kazakoff said.
“That big companies like Made Establishments, Woolworths and Rockpool have been able to effectively get away with the underpayments over many years feeds a culture of non-compliance in those industries and means smaller employers have been even less likely to suffer significant consequences,” she said.
“It’s especially unfair when you consider big companies are the ones with the resources to afford good advice, sophisticated payroll systems and staff to ensure the standards are being met.”
Kazakoff acknowledges that the reason certain industries are more prone than others has to do with how awards are administered. Salaried workers who complete significant amounts of overtime or unsociable hours, as in the case of hospitality, for example, are at higher risk of underpayment. That shouldn’t be a get-out-of-jail-free-card for employers, she said.
“Employees who are found to have stolen even tiny amounts from the employer face being marched out of the building by police, almost certain dismissal and ongoing reputational damage,” Kazakoff said.
“It is generally accepted that an employee’s actions in those circumstances fundamentally damages the relationship of trust with the employer. Yet when an employer steals wages from an employee, we’re expected to accept an apology and an excuse that ‘the law was too complex’,” she said.
She’s not buying it and reckons it’s about time employers shaped up instead.
Staff who are an entire year’s salary out of pocket might agree.
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