COMPANY DIRECTORS CAN NOW BE PERSONALLY AND LEGALLY LIABLE FOR EMPLOYEE UNDERPAYMENT.
Updated: Feb 24
The Australian Fair Work Act and payroll compliance system in our country has been bewilderingly complex to major organisations for years now.
With a huge rise in enterprise underpayment cases, such as a recent major Australian supermarket that has been identified as underpaying staff by nearly $300 million dollars, some state governments in Australia have now enacted Wage Theft Laws that result in business directors and leadership being personally and criminally liable for underpaying their staff.
Now, not to be alarmist, the purpose of the legislation is to prosecute employers who ‘intentionally’ have been underpaying paying their staff which has been classified as an offence of stealing. However, the employer has the burden of proof to show they were not acting intentionally.
Legislation in Queensland and Victoria has now passed and covers a broad range of underpayment issues such as:
Unpaid hours or underpayment of hours;
Unpaid penalty rates;
Unpaid superannuation; and
Given that a large number of Australian businesses are unknowingly underpaying their staff (note, not intentionally underpaying) there is a heightened risk of criminal prosecution if the enterprise is unable to prove that they did not act intentionally or without malice. This is especially risky given that maximum penalties include up to 10 years imprisonment. In positive news, Company Directors generally have a 6 month "grace" period from when they start the Directorship to identify, admit and work on resolution of underpayment breaches.
So how do you ensure your business is not underpaying staff?
It is the responsibility of every Board member and senior business leader to engage in a thorough payroll risk and business audit to ensure their current payroll system is adhering to Fair Work Act legislation and Modern Award regulations. We most often see customers realising they are underpaying staff because their payroll technology is out of date or prone to human error. This then sparks the need for a payroll transformation project that is kicked off under duress, or reactively.
If you’re unsure if your payroll system meets compliance or is in need of a transformation, be sure to contact one of our payroll project experts and partners and we will work with you to understand your risks and devise a roadmap to recovery, using specialist payroll project expertise.