Published on Feb 14, 2017

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Short-changing staff doesn’t pay.

Do you keep track of wage increases and increment dates? If you don’t keep on top of your payroll you may end up short-changing your employees. An Adelaide business was recently fined $85,000 for this mistake.

With the spotlight on wage underpayment a number of cases of employers caught underpaying their employees have come to light in recent weeks.

Inside Small Business have reported on the short-changing of a regional apprentice in South Australia, discovered by the Fair Work Ombudsman as part of their program to audit regional employers.

The apprentice had been short-changed by some $6500, as a result of a below-minimum hourly rate.

Smartcompany recently reported on an Adelaide business for underpaying its employees. Not only did the window company have to back-pay the affected staff members in wages and superannuation, the company were also were dealt an $85,000 fine by the Federal Court.

Early last year the International Business Times noted that a report published by ER Strategies showed that 84% of Australian fast food restaurants underpay their employees. There is also the  ongoing 7-eleven wage underpayment scandal.

Underpaying employees is not only expensive, but can lead to high staff turnover and low staff loyalty. It can also put you in the sights of Fair Work Australia.

Why does it happen?

Poor record keeping can be the problem, with employers not adequately keeping track of employees details. Some employers give in to the temptation to underpay workers. The lowered wage might be based on the employer’s idea of what the job is worth, or what the employer thinks they can afford.

Despite the rise in both consumer confidence and small and medium business owner confidence, job seeking remains challenging. Too often employees find themselves accepting below-minimum wage because of job shortages in the current job market.

Check your responsibilities

It is important to understand that minimum entitlements are legislated, and cannot be bartered off. Giving your employees staff discounts or the occasional free item does not mean you can deduct that amount or percentage from their wage.

Record keeping is essential in payroll. Below are just some of the records you need to monitor:

  • The most recent awards for your industry and understand the terms and conditions in each award, including employee entitlements and allowances.
  • Good record keeping according to legislative requirements, including increment dates and other relevant information such as promotions or changes in wage steps that will affect wage rates.
  • If you use an external payroll company make sure they are reputable and transparent in their dealings with you.

If you are unsure about your obligations or think you might be underpaying your employees, go to Fair Work Ombudsman to help you get back on track.