Rockpool. Michael Hill Jewellers. Lush. Amart. 7-Eleven. George Calombaris. Woolworths.
You have no doubt seen these names in the headlines, but what do they have in common? These high profile businesses have all been investigated byFair Work Australia(FWA) for underpaying their staff, prompting Prime Minister Scott Morrison to put employers on notice by moving to criminalise wage theft. However, it is not just well-known businesses that are in danger of coming under the scrutiny of Fair Work. Many small businesses are slow to recognise the dangers and penalties of not paying staff correctly. It’s time to understand what’s at stake if your business doesn’t get it right, lest you end up in the headlines for all the wrong reasons.
‘Wage theft’ is a phrase coined by unions that has come to mean the practice of paying workers less than they are entitled to under Australia’s workplace relations system. Both illegal and immoral, wage theft can include: underpaying wages; avoiding penalty rates or overtime; failing to contribute to your employee’s superannuation; and not paying entitlements such as sick leave, annual leave or carers leave. Thought to be rife across many industries and types of businesses, the cafe, restaurant and fast food sectors are among the most common culprits. However, they are not the only offenders. All small businesses, no matter the industry, need to be aware of the dangers of falling foul to wage theft.
Image: Unsplash/Bill Oxford
More likely to be caught than ever before
Recent estimates suggest that Australian businesses short-changed their employees by more than $40 million in unpaid wages, penalty rates and superannuation, in the last financial year alone. In fact, the Fair Work Ombudsman reported that its latest compliance and enforcement actions resulted in $40,204,976 being repaid to a total of 17,718 workersacross the country – making it the highest volume of funds it has ever recovered in a single financial year. Both the Australian Taxation Office (ATO) and FWA, with their growing digital and real-time capabilities, are identifying businesses doing the wrong thing with increasing ease. Furthermore, by focusing on industries that traditionally underpay workers like those mentioned previously – offenders are more likely to get caught.
It’s not just Fair Work and the ATO that you have to worry about
In the past three months alone, the ATO’s aptly named ‘Tax Integrity Centre’ has reportedly received a record 15,000 reports from Australian workers about businesses that they suspect are dodging their obligations to employees. Whether it’s people accusing businesses of underreporting their profits or people’s hackles being raised by having to give or receive cash payments – these increasingly common tip offs to the ATO mean that, if you’re doing the wrong thing and are not yet on the radar of these federal regulators: you soon will be.
However, what if you’re not aware that you’re doing the wrong thing?
Australia has some of the most complex workplace laws and regulations in the world. It is easy to get it wrong. Indeed employers and businesses – particularly small businesses – havelong called for an overhaul of Australia’s workplace regulations, to make it simpler and easier to navigate. However, while they may be complex, the ‘we didn’t realise’ defence is no longer cutting it.
Be aware of the dangers
Under proposed new reforms, employers that deliberately underpay or dodge obligations to their workers could face a stint in prison for the most egregious cases. While organisations like the Business Council of Australia and the Australian Industry Group oppose criminal sanctions, arguably the more businesses who make it to the headlines for all the wrong reasons, the more likely these changes will become the new standard to which your business is measured.
As a company who works exclusively with Australian small businesses, we know all too well how many small business owners are time-poor and overstretched, and struggling with obligations like Single Touch Payroll, GST, superannuation, and their BAS. It is also worth noting that accountants and bookkeepers who work with businesses and organisations who are underpaying their staff are increasingly a target for these federal bodies. We cannot and will not knowingly work with a client who is underpaying their staff, so we are committed to supporting you to cross the t’s in GST and dot the i’s in IAS.
Here are three ways that you can make sure you don’t end up in the headlines for all the wrong reasons…
1. Own and fix your mistakes
Despite crackdowns, FWA recently declared that its focus for the upcoming year is about shifting from punitive action towards greater education. They announced in August 2019 that, as opposed to criminal sanctions, compliance notices will be used more readily. These notices are not a penalty or an admission of guilt, but rather an opportunity for businesses to get informed and rectify the situation of its own accord.
Compliance notices might involve being required to sign a court-enforceable undertaking to amend your payroll processes and repay all monies owed with interest. It could involve making a contrition payment or even a public apology. The main thing to keep in mind is that – if you are doing the wrong thing by your employees, or even just think you might be doing the wrong thing – own it, and fix it.
2. Get familiar with Fair Work
FWA is designed to help employers and employees understand and follow Australian workplace laws. As such, they have developed a suite of online tools and resources to help small businesses navigate their obligations. A good place to start is Fair Work’s ‘Get help’ page, where you can select the issue you want more information about and they will point you in the right direction. Another useful tool is the Pay and Conditions Tool (PACT), which is essentially a calculator that helps both employees and employers calculate base pay rates, allowances and penalty rates (including overtime). For an overview of how it works, you canwatch FWA’s introductory video here. And, if you’re feeling adventurous, sign up for one of their free online training seminars or take their everyday workplace quiz to see how your knowledge stacks up!
3. Ask for help
We know that in business, as in life, we can’t do it all alone. Navigating workplace rules and regulations is no exception. It is important that, rather than muddling through yourselves, we ask for help! There are a myriad of specialist legal and HR services out there – some better than others – that can help give you the guarantee you need that you’re doing things right. At BASic Bookkeepers it is literally our business to help you run yours – so, if you want us to put you in touch with a specialist service, simply send your dedicated bookkeeper an email, or better yet – give us a call on 1300 852 575.
Investing the time to get your workplace compliance right means that, not only will you not end up in the headlines for all the wrong reasons or have to spend time worrying about looking good in an orange jumpsuit, you can free your mind to focus on all of the other important areas of your business that only you can do.
