From industrial relations experts, TTIA
It always strikes me how quickly a new term or phase can catch on and then become part of the established lexicon used by all and sundry to describe a previously less provocative term. I guess it’s all about shock value. The latest to be bandied about by politicians, public servants and the media is the term “wage theft”.
When I started out in industrial relations as a wet behind the ears Industrial trainee with the Chamber of Manufactures (Australian Business) in the early 1980s, and for much the time thereafter, it was known simply as underpayment of wages. A pretty self-explanatory description I hear you say? Indeed, it was, as were some of the remedies. I remember being taught by my seniors that the regulatory authority at the time operated, at least unofficially, on an “under and over’s system”. Put simply, overaward payments could be offset against incorrectly applied entitlements in the relevant award.
There was less apportioning of guilt, smaller fines and, if the employer rectified the underpayment, the fine was often small or non-existent.
Yes, I’m getting older and we now live in different times. Issues like underpayment of wages are seen more in black and white terms now, like good v evil! There is less tolerance for employer payroll errors and you have state governments and their regulators that are all too happy to prosecute and fine employers to fill up state treasury coffers and make electoral statements.
Indeed, the criminalisation of wage theft in Australia has, in recent times, become an initiative increasingly pursued by state governments.
Which all leads me back to “wage theft”. My experience (and it’s not just a lame observation regarding TTIA Members or the timber industry in general) is that most employers overwhelmingly aim to pay their employees the correct rates of pay and entitlements. In the process, they deal with an extremely complex award and regulatory environment that is ever changing and it’s little wonder mistakes are sometimes made on the way.
However the reality is state governments are now viewing the concept of wage theft as a threshold workplace issue, irrespective of whether it is seen by some as a populist way to gain votes or increase revenue. According to PWC the issue costs workers $1.35 billion each year.
The new laws, which made Victoria the first state to criminalise wage theft when they were announced last year, will see businesses who withhold a range of entitlements face fines of up to $198,264 for individuals, $991,320 for companies and up to 10 years’ jail time.
The criminalisation of wage theft in Victoria (and later, Queensland) is a warning to employers who are proven to dishonestly withhold employee wages and entitlements.
Businesses need to actively check on a regular basis that they are paying and classifying their employees correctly under the appropriate award. That also involves reviewing policies and procedures to ensure they comply with the National Employment Standard as well as general award provisions and state acts. The days of an employer assuming they’ve got their payroll right until someone complains are over.
The laws will also seek to capture employers who falsify employee entitlement records, such as payroll records, and those who fail to keep employment records when they come into effect on 1 July.
The Victorian government claimed, when the laws were announced, that the new record-keeping offences are aimed at employers who attempt to conceal wage theft by falsifying or failing to keep records. Therefore, it is crucial that employers brush up on their record keeping requirements under the Fair Work Act.
The government claims the new laws are not aimed at employers who make honest mistakes miscalculating entitlements, although the discretion will be entirely up to the government authority as to whether to prosecute.
The Victorian Act applies to a broad range of employee entitlements, including superannuation payments.
As part of their crackdown on “wage theft”, the Victorian government revealed the establishment of the Wage Inspectorate of Victoria, which will act as a new statutory authority with powers to investigate and prosecute wage theft offences. They have issued statements saying employers who commit wage theft deserve to face the “full force of the law”.
While Queensland and Victoria have introduced laws to criminalise wage theft, the NSW Parliament is currently debating its own wage theft law. Not to be left out, the Federal Labor Opposition see the issue as a win-win for them and, in the recent budget reply, promised to introduce laws that would mirror the states and criminalise wage theft.
From TTIA’s point of view, there is no doubt that criminalising of wage theft in Queensland and Victoria is a warning to business that payroll and record keeping issues are now front and centre of the sort of essential due diligence required to run a business.
The recently announced Fair Work wage case increase of 2.5% for most employees from the first full pay period on or after 1 July, provides a line in the sand for employers to check whether employees are appropriately classified, and that their rates of pay and entitlements are consistent with current legal requirements. Now is the time to contact us!
TTIA offers a valuable service to Members of a wage audit which is carried out on site and comprises:
- Ensuring the company is using the correct award coverage and compliance with appropriate award rates, superannuation requirements, etc.
- Review of policies and procedures to ensure compliance with the National Employment Standards and Fair Work Commission.
- Ensuring Members are using appropriate pay slips, time and wage sheets.
The audit generally takes half a day and is offered at a very reasonable cost. If any FTMA Member is interested in this service, please contact the TTIA office on (02) 9264 0011.
From industrial relations experts, TTIA