Underpayments of wages and entitlements continue to receive widespread media attention. This, among other reasons, makes it important for all businesses to ensure they are paying employees correctly, Ai Group Workplace Lawyers warn. 

In addition to the significant reputational damage caused by being named and shamed as a ‘wage thief’, other consequences of failing to pay employees correctly include:  

• Fair Work Ombudsman investigations which could result in litigation and courts ordering penalties against your business and you personally, and  
• if you are in Victoria, criminal sanctions brought by the Wage Inspectorate. 

Prevention is the best cure. 

“Complying with the Fair Work Act should be front of mind for a business,” Senior Associate Maria Bicchi said. 

“It should be part of the culture, not a secondary consideration.” 

There are number of common causes of underpayment, including:  

• not classifying employees correctly; 
• not understanding how payments like penalties and overtime apply;  
• using annualised salaries which are not subject to ongoing review to ensure award minimums are still met and 
• failing to manage employees’ hours, for example by not recording overtime or having proper approval processes in place.  

“Ensuring that you’re proposing to pay a new employee correctly from the first day of their employment is key in managing this risk,” says Ms Bicchi. 

“We can help you set that up through assisting with identifying the right Award coverage and classification and then carefully drafting your contracts so you have the best level of protection.” 

Any time an employee queries their pay is also a red flag. 

“An employer might uncover wage theft after an employee raises concern,” Special Counsel Jessica Dolan said. 

“Perhaps the business hasn’t recorded overtime correctly or they’ve got the award penalties mixed up. That’s something we can assist with. We would be asking for pay and time records so we can check if what has been paid is enough.” 

Aside from ensuring you set up new employees correctly, regular time and wage audits — a service that Ai Group Workplace Lawyers can assist with — are the best way to ensure ongoing compliance.

Such audits enable businesses to regularly ensure they are paying their employees correctly and to take swift action where any issues are identified. 

Please contact Ai Group Workplace Lawyers on 1300 55 66 77 for assistance in Fair Work Act compliance and to help ensure your good reputation is upheld.