Don't Let Underpaying Your Staff, Bring You Under

Author: Jason Donoghue

There are many reasons that an employee may be underpaid throughout the course of their employment; through computer errors, incorrect hours paid, penalty rates not applied or non-compliance with the correct award.  As a business owner it is important to stay compliant with The Fair Work Ombudsman*.

Instances where underpayment tend to occur is when a business grows rapidly. During this stage of the business life cycle, owners tend to focus heavily on customers, suppliers and product/service offering. As a result, the HR process is often overlooked or even completely neglected.

Business owners must allocate time to review their HR requirements. An opportunistic time is at the beginning of each Financial Year, as this is traditionally when the Fair Work legislation is updated. It also provides an opportunity to review the past years wages and identify any discrepancies early.

Other alternatives to reduce HR compliance risk is:

• If your business has the available financial resources, employ a dedicated HR Manager in house.
• Engage a specialist HR contractor per annum.
• Discuss HR requirements with your governing industry body.
• Organise a calendar appoint each year to either contact Fair Work or track the website for changes and updates.
• You can also subscribe to the Fair Work email list, which sends out legislative updates that will help you stay informed.

There can be many considerable repercussions for not paying staff the correct amount of wages. The main repercussion is evidently the financial strain this can cause your business due to not provisioning for this unexpected liability. Others include your business suffering from reputational risk and exposure to further legal contingencies. Fair Work can also issue 'Compliance Notices' and/or 'Infringement Notices' if employers are found to be not complying with the legislation.

Heading into the Christmas period can be a quiet time for some businesses, with shutdown periods occurring. This time could be utilised to self-audit and review wages to ensure staff are being paid in accordance with their award or enterprise arrangement. 

Keeping up to date with the relative legislation can save headaches in the future whilst also keeping staff engaged and happy.

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If you believe you may have underpaid your staff, there are contingencies to follow to rectify this. For more information, visit the Fair Work Ombudsman website on https://www.fairwork.gov.au/.

*The Fair Work Ombudsman ensure businesses within Australia are compliant with the Fair Work Act 2009.