Even the big companies get pays wrong – CBA, Bunnings, Woolworths, 7 Eleven.   Not only did it cost those companies money, there was a loss of reputation plus significant costs of rectification.   In Queensland, 'wage theft' is now a criminal offence (for intentionally failing to pay or underpay employees).

How Does Underpayment Occur?

There are six main events or causes of underpayment:

1. Awards are complex and it is possible to choose the wrong award or misinterpret requirements on allowances, overtime, penalty rates, loading, and pay grades;

2. Award increases have been missed or incorrectly entered into the payroll records;

3. Hours worked are wrongly recorded, so incorrect application of pay rates and penalties;

4. Tax Withholding is wrongly calculated;

5. No regular evaluation of pay grade or classification;

6. Incorrect engagement of individual sub contractors at an agreed or nominal rate (these are more likely to be permanent part time, and so receive super, workcover, leave loadings, etc.).

Detection of Underpayment

There needs to be regular internal checking and pay system reviews;   even annually is a step forward.

How to Rectify

This can be a labour intensive task, there is so much that may need to be checked.   An employee can bring an action for recovery for up to six years after an underpayment occurred, so check for more than just a few months.   Keep people informed and tell them the plan for adjustment, you need to prevent complaints to Fair Work or even escalation to a criminal complaint.   It is not only the underpaid wages to consider, there is also superannuation, perhaps payroll tax, and also PAYG Withholding.

Do you Need Help?

We are seeing underpayment complaints to Fair Work (especially by underpaid 'sub-contractors') and to the ATO for superannuation (mostly from individual 'sub contractors').   These take considerable time to resolve (however, the cost is usually covered by Audit Insurance).

We can help interpret and to qualify any possible exposure or costs.   If you would like to do this yourself but don't now where to start, please reach out to us.