If there was ever a time to be a law-abiding, business conscience employer – now is the time. Who would have thought a global pandemic would have prompted such a change in our working circumstances driving a closer examination into Australia’s workplace relations framework. While Covid-19 has transformed the home into a business office, employer representatives, experts, and unions have worked together to explore solutions for wage compliance and enforcement. The active union movement and class action interest have led the Fair Work Ombudsman (FWO) to focus on the issue and ensure businesses are aware of the consequences. Not to mention the Victorian and Queensland governments have passed legislation making wage theft a criminal offense with potential imprisonment as a penalty.
Wage theft sounds deliberate – and while it is the unlawful underpayment of employees – it describes all cases of employee underpayment, whether deliberate or unintentional. In all the years we have been working as tax accountants, we have seen very few underpayment cases. However, they do occur – even when you believe you have a plan in place. Often, underpayment cases in small businesses have occurred when employers have not understood and applied the correct aware requirements, resulting in wage non-compliance. This is a classic case of non-deliberate wage theft.
In Australia, there is a complex award framework, with over 120 modern awards – each award outlining minimum award wage rate and employment standards and conditions for employees based on their industry or occupation. The Fair Work Ombudsman keeps business owners on their toes by regularly reviewing and updating rewards. In fact, the framework is so complex – that we would recommend a professional with specialist knowledge to help you navigate it. This year, as a result of Covid-19, the Job Keeper wage subsidy (a vital lifeline for businesses trying to stay afloat) has compounded additional complexity. And with the introduction of Job Keeper 2.0, there’s no wondering why small businesses are left scratching their heads in confusion. Job Keeper 2.0 introduced changes to rates and eligibility, and employers were asked to apply a two-tier wage subsidy to its workforce. See what I mean when I say – best to hire a financial professional, who is equipped with the knowledge on how to navigate the system.
While there is no single mistake that addresses wage non-compliance, here’s how you can avoid wage theft and work with confidence >>
It is important that the Fair Work Act is completely understood by employers and business owners. Unfortunately, as a business owner, you may not have the time or the knowledge to apprehend all the requirements set out in the Fair Work Act. Therefore, it is worthwhile to have an accountant and HR representative to assist you in navigating its complexity. Additionally, external help can also run an audit on your business to identify any issues you have within your business.
Custom your payroll system
When utilizing a payroll system, businesses must not forget to ensure it is up-to-date with all the correct awards and classifications. Unfortunately, out-of-the-box payroll software is not adequate for Australia’s complex award system; therefore it requires customization and maintenance. A professional can also assist with the management of your payroll system.
Understand award requirements and employee classifications
Keep up-to-date with relevant awards for your industry, and ensure you are correctly classifying employees. Misinterpretation of awards can result in an investigation by the Australian Taxation Office, and incorrect employee classification can bring Fair Work Ombudsman investigations. Both awards and classification issues can lead to the underpayment of your employees.
Made a mistake? Fix it ASAP!
While wage compliance is at the forefront of regulators, and unions – why not work with a professional to audit your business. If you find discrepancies within your employee classification or underpayments to employees, you will need to determine the length and amount of underpayment and rectify the mistake quickly. Additionally, finding the cause of the mistake will prevent underpayment from occurring again.
Navigating payroll, wage compliance, and the Fair Work Act in 2020 is more complicated than ever. Boost your confidence in your business’ compliance requirements, and come chat with us at RT Taxation accountant services for small businesses. We are equipped to help you keep on top of all the complexities surrounding wage compliance.
If you have any questions about the accuracy of your payroll systems in eastern suburbs and remuneration practices, now is the time to reach out to R T Accounting & Taxation Services for assistance.