Underpayments to Employees – Shooting first, asking questions later

It is clear we are entering a new landscape in corporate australia where the media, social and otherwise is fast to act as judge, jury and executioner of companies found to be underpaying their employees.

A growing lineup of celebrity chefs and now large supermarket brands like Woolworths are being caught in the net.

However, we shouldn’t necessarily be so quick to put these companies in our sights. As Gerard Barwell explains in this article, the issue is more complex than it seems on the surface.

‘Firstly, I agree that deliberate fraud should not be tolerated’ says Gerard.

There are multiple issues at play which need to be understood in order to diagnose what went wrong in individual cases of underpayment.

Deliberate Fraud and intent is the first assumption of many journalists and social media commentators but it isn’t always the case.

Another issue that can occur is that certain awards can be complicated and the employer may have interpreted them incorrectly. The employer may have harmlessly introduced certain policies or payment calculations that inadvertently meant an underpayment for the staff member.

There is also – as anyone knows in IT – a potential system configuration issue. A simple miscoding of an employee’s classification. Or indeed not having the base rules up to date for a change in an award, can result in pay being incorrect for that employee.

Integrations between systems that are not working precisely and data conversion when changing systems can also have an impact.

There can also be issues when moving from in-house processing to outsourcing or from one outsourced provider to another. These may occur if the internal EBA knowledge is reduced or not communicated effectively.

What is therefore important for companies is the following:

  1. Know the current awards for all employees
  2. If there a confusion about an element of an award, get legal input from someone who is close to contracts and legislation – don’t just assume
  3. Make sure your system is up to date at all times, through upgrades, changes to legislation and when changing employees who manage the calculations.
  4. If you find an issue, handle the employees straight away and get the differential paid immediately.

Some of the criticism of companies comes from them being slow to act and being seen to minimise the issue or not handle employee’s concerns quickly.

And of course, there are those who have done this deliberately and for them, the full force of the law will play out.

If you have a system configuration issue, or you’re not sure and need some help, then Silverdrop has experienced consultants ready to help.

Call us on 1300 450 111 or email for more information.

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