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Underpaying Employees - a 2020 Focus


2020 commenced with a focus on businesses who have underpaid their employees. This is the focus of the Fair Work Ombudsman, the Attorney-General and the courts.

A Melbourne based astro turf business and its sole director was fined by the Federal Circuit Court a total of $240,000 ($200,000 for the business and $40,000 for the sole director) with the fines being payable to the underpaid worker in addition to the back pay owing of $8,088.

The fines were high to the point of unusual, and have raised some interesting questions as to whether a precedence will now be set.

In this instance, the actions of the employer impacted the decision however, with a number of cases being heard and the decisions against even businesses who self reported underpayments, it is understood that whilst COVID-19 will disrupt and delay court decisions, is unlikely to change the focus on this issue.  On 26 March 2020, the Fair Work Ombudsman stated, “We will continue to utilise our full suite of enforcement tools to hold employers to account and any workers with concerns should contact us.”

Qantas self report their underpayments to staff. They back paid all payments plus 6% interest (above the RBA cash rate) and then were bound by a court Enforceable Undertaking (EU) where they had to make a further $1,000 additional payment to affected employees as well as a contrition payment to the Commonwealth’s Consolidated Revenue Fund of $390,500.

Should any further underpayments be found, Qantas will have to pay higher interest payments, an additional contrition payment in addition to other penalties.

The Fair Work Ombudsman has prioritised pursuing employers who are underpaying workers and will publicly name employers who do the wrong thing.

This is due to a recent audit of hospitality, domestic construction, retail, manufacturing and administration services where 50% failed in workplace basics and 70% of these businesses were found to be underpaying employees.

Whilst COVID-19 has causes delays to these cases, they will return to the spotlight.  The Attorney-General, Christian Porter in February, was considering new penalties via legislation to deal with wage theft.  Changes considered include criminal penalties for underpayments, significantly higher financial penalties and an increase in the Fair Work Ombudsman’s powers.

It has further been suggested that offending employers may be imposed to adverse publicity orders which would required them to display a notice admitting to underpaying workers.

Never has there been a more vital time for employers to ensure they are paying their staff accurately.

Should you require assistance in determining you are paying your staff correctly, please contact us on 1300 720 004 or [email protected]

Information in HR Advice Online guides and blog posts is meant purely for educational discussion of human resources issues. It contains only general information about human resources matters and due to factors such as government legislation changes, may not be up-to-date at the time of reading. It is not legal advice and should not be treated as such.

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