When did you last check your payroll matches the applicable modern award?
Wage Theft is now a criminal offence. Now is the time to act
“More than $1.2 billion is syphoned out of workers’ pay packets each year in unpaid or underpaid wages and around $1.1 billion in underpayment of superannuation.”
The Queensland Government has taken a firm stance on ‘wage theft’ by recently introducing the Criminal Code and Other Legislation (Wage Theft) Amendment Bill 2020 (Bill). On 9th September 2020 intentional withholding of wages and entitlements by employers in Queensland is a criminal offence.
The Bill amended the Queensland Criminal Code definition of stealing to provide an offence against an employer who intentionally fails to make payment of wages or entitlements when it becomes payable to their employee. An amount payable under an Act or industrial instrument or agreement, to an employee for the performance of work, is a thing capable of being stolen. Employers who have committed an offence of stealing can be liable to up to 10 years imprisonment. Criminal Code and Other Legislation (Wage Theft) Amendment Bill 2020; Second reading speech by IR Minister Grace Grace, July 15, 2020
Industrial instruments include ‘fair work instruments’ under the Fair Work Act 2009 (Cth) (FW Act) and ‘industrial instruments’ under the Industrial Relations Act 2016 (Qld) (IR Act).
The Explanatory Memorandum provides that the offence is intended to cover a range of payments and entitlements, such as:
- unpaid or underpayment of hours worked;
- unpaid penalty rates;
- unreasonable deductions (for example, tip raiding in the hospitality industry);
- unpaid superannuation;
- underpayment resulting from misclassifications under an award;
- entitlements owing as a result of sham contracting; and
- misuse of Australian Business Numbers.
The Bill will also increase the maximum penalty for the offence of fraud relating to wage theft to up to 14 years imprisonment.
The Bill does not introduce the concept of recklessness, as the stated intent is not to capture employers who act honestly. Employers who are aware of entitlements owing to their employees, but who fail to provide the entitlements, would be exposed under the provisions.
What You Need to Know
- Wage theft is a criminal offence in Queensland punishable by up to 10 years in prison for ‘stealing’ and a maximum of 14 years in jail for an offence of fraud.
- Workers, or a Union on behalf of a worker, can initiate the process by making a complaint to Queensland Police.
- The process involves conciliation for cases up to $20,000.
- Workers, or a Union on behalf of a worker, can initiate a civil claim instead, through a new Industrial Magistrates Court if they choose.
What You Need To Do
Now more than ever, employers need to get pays right. This means:
- Ensure your staff are being paid correctly under the relevant Modern Award or enterprise agreement, keeping in mind recent changes to Award minimum rates of pay and conditions
- Be sure to factor in allowances, overtime and other relevant award or enterprise agreement entitlements to ensure you are paying pursuant to an award or enterprise agreement
What can we do to help
Due to the complexity of modern industrial obligations payroll errors are made and frequently. Most underpayments are a result of administrative error, a misunderstanding of the payments required in the Modern Awards, outdated contracts and payments and/or a shortcoming in the payroll system, rather than any deliberate attempt to underpay employees.
If you are concerned that there might be errors in your processes Fresh HR Insights is here to help with our two options for a payroll audit.
Annual Salary Projection based on an average week
- Review award to identify relevant penalties and allowances
- Create audit calculations and provide a written explanation of calculations used
- one page per employee for sample week x 48 weeks plus 4 weeks annual leave
- Create an overview page linking to each employee tab for a one-page summary
Data required from you in addition to the above request would be:
- Sample average weekly hours worked, preferably including the day of the week, start and finish times, (and confirmation of breaks taken) in order to identify applicable penalty rates
The investment is $45.00 + GST per employee with a minimum payment for 10 employees ($450.00 + GST)
Full annual year review based last 12 months calculations
We will identify as part of our audit additional information that is relevant to you to ensure you have all the facts. As an example, in previous reviews we have identified hours and or allowances such as working away allowances not entered on timesheets but paid. This is not uncommon. To address, in addition to reviewing hour entered on timesheets each week, we review the corresponding payment and amend the timesheet entries to match the hours paid.
Data required in addition to the above request would be:
- Timesheets for each week of the 52-week period being reviewed stating actual hours worked including day of the week and start and finish times (to identify relevant penalty rates if applicable).
- Detailed Payroll report for each of the 52 weeks including a breakdown per employee of hours processed and penalties and allowances paid for each of the 52 weeks provided.
As there is a far greater level of detail required the investment is $75.00 + GST per employee with a minimum payment for 10 employees ($750.00 + GST) This is an extremely detailed review that takes on average 1-2 hours per employee depending on the availability of reports and the information contained within the reports. The price reflects the time and depth required.
What risks can you face if you underpay your employees?
Underpayment can lead to legal proceedings being brought by the affected employees or unions on their behalf. The Fair Work Ombudsman can also initiate an investigation and court proceedings for underpayment.
If a court finds you have underpaid an employee in contravention of the Fair Work Act 2009 (Cth) (FW Act), it can order that you make up the underpayment together with interest. It can also require you to pay a penalty of up to $66,600 per contravention (if a body corporate employer) or $13,320 (if an individual). Persons involved in the contravention by a body corporate employer (e.g. payroll officers) may also be separately penalised as accessories to the underpayment.
In EZY Accounting 123 Pty Ltd v Fair Work Ombudsman (2018), an accountancy firm was found to be accessorially liable for a restaurant chain’s underpayments. The firm was the payroll service provider to the employer and was found to be knowingly involved in the employer’s failure to pay its workers the applicable award wage. The firm argued its role was confined to entering data provided by the employer, its client.