THE IMPORTANCE OF PAYING CORRECT WAGES AND SUPERANNUATION
In some recent examples, discussed below, the Fair Work Ombudsman (FWO) has shown that ensuring that employers comply with their obligation to pay staff at their correct statutory rates, is a focus now, and will continue to be a focus into 2021.
Recently, as a result of an investigation by the FWO in respect to a voluntary report by the National Library of Australia (National Library), the National Library has entered into an enforceable undertaking (EU) with the FWO. The EU relates to the National Library underpaying employees to the tune of approximately $250,000 in wages and superannuation.
The underpayments were in respect to non-payment of weekend and public holiday penalties for casual employees of the National Library going back 20 years.
The relevant casual employees were library assistants who were engaged by the National Library to assist the general public on weekends and public holidays.
There was a range of individual underpayments, of between $12, and approximately $20,000. The National Library discovered the issue during an internal payroll audit and as a result, self-reported to the Fair Work Ombudsman which led to the investigation.
According to the FWO, more than half of the underpayments have already been rectified.
As a consequence of the National Library signing the EU, the National Library became compelled to undertake the following:
- Repay the underpayments to every employee within the next three months.
- Pay additional interest on all back payments.
- Pay superannuation on the underpayments.
- Display an online notice detailing its workplace law breaches.
- Apologise to the effected workers.
- Provide appropriate training for the managerial staff.
- Provide appropriate evidence to the FWO that the National Library will be compliant moving forward.
The National Library is not required to pay any type of penalty due to its co-operation in rectifying the issues of non-compliance, including rectifying the relevant underpayments.
FWO's Focus on Enforcement
Consistent with the above investigation, the FWO's 2019/2020 annual report shows that in the previous financial year, the FWO has markedly increased their use of their investigation and enforcement powers.
For example, for the 2019/2020 financial year, the FWO issued 952 compliance notices, which resulted in recovery of approximately $7.8 million in unpaid wages, compared to the 2018/2019 financial year, where the FWO only issued 274 compliance notices, which recovered approximately $1 million in unpaid wages.
The FWO also increased the number of proceedings commenced with 54 different proceedings filed in the 2019/2020 financial year, up from 23 different proceedings in the 2018/2019 financial year.
In the 2019/2020 financial year, the FWO also decided to focus on sham contracting, with the creation of a new sham contracting unit, and has pursued a number of employers in sham contracting proceedings so far.
What Does This Mean for You?
It is likely that with the FWO's renewed and increasing focus on compliance with payment of appropriate wages and superannuation, that many more employers and industries will be targeted in 2021.
Accordingly, our recommendation is to undertake an audit of your payments to your staff to ensure that your employees are all paid and classified appropriately. For example a key target for the audit is that you are not incorrectly classifying any of your employees as "independent contractors".
Of course, should you require any assistance or advice in respect to the suggested audit, our experienced employment team can assist you with this at a competitive price.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.