Underpayment Claims – Are you paying your staff correctly?

Public news

It is easy to understand that small and even large businesses may easily be overwhelmed by Award rates and the MTA’s Workplace Relations team is here to assist you with advice to ensure that you are meeting your obligations.

Recently, On the Run responded to a threatened class action being proposed against them by Adero Law, who are representing up to 8000 employees for significant underpayment claims against the convenience and petrol station chain. While the claim was denied in the media, the class action is still being explored. On the Run is not the only company that is being investigated and facing underpayment claims.

The regulator is cracking down on companies that misclassify employees and the outcome can include penalties and orders to rectify all underpayments plus interest.

Qantas, Super Retail Group (owners of Rebel Sport, Supercheap Auto, BCF and others), Commonwealth Bank, Michael Hill, Bunnings, Woolworths and the Australian Broadcasting Corporation have all admitted to making underpayments, with Woolworths potentially owing up to $300 million in back payments to current and former staff.

Burger chain, Grill’d, have also recently been accused of underpaying staff under the guise of “traineeships”, a claim once again denied by the employer.

At the smaller end of the employer scale, the Fair Work Ombudsman has repeatedly been investigating, issuing notices, and in many cases prosecuting, for underpayment claims. In many cases, the penalties from prosecutions far exceed the initial underpayments. Underpayments and prosecutions for underpayments can exist in every industry and at every level of employment.

In one recent case, the Fair Work Ombudsman commenced legal action against a Queensland transport company for allegedly misclassifying four drivers as independent contractors when they were in fact employees, underpaying them $63,803.

In another recent case, the Fair Work Ombudsman secured penalties against a major service station chain, Westside Petroleum, and three of its management staff, for underpaying employees at its sites in NSW and Victoria. As well as the company, the general manager, company accountant and area manager were each penalised.

The underpayments were as a result of Westside Petroleum generally paying employees a flat hourly rate. This resulted in underpayment of employee’s casual weekdays, weekends, public holidays and overtime rates under the Vehicle Manufacturing, Repair, Services and Retail Award.

This case sends a warning to employers about paying flat rates rather than applying the relevant Award. If any members have concerns about how they are calculating rates of pay for their employees, please contact the Workplace Relations team who can assist with advice or provide audit services.

It is also a timely reminder that the obligations to ensure that employees are correctly paid rests not only with employers but also with managers within the organisation, or even advisors such as accountants or payroll providers, who may be outside the organisation but assist the organisation with payroll services.

In a third case, a failure to provide paid meal breaks in accordance with the Road Transport and Distribution Industry Award 2010 has resulted in national parcel delivery company, Couriers Please Pty Ltd, underpaying staff $382,065 over a period of eight years. Action by the Fair Work Ombudsman led to a Court-Enforceable Undertaking a back-payment to all employees.

The MTA’s Workplace Relations team have advised and helped resolve repeated claims by employees of members for underpayments, often arising either as a result of a misunderstanding relevant Awards or industrial relations law, or simply a lack of compliance and auditing to confirm that payments remained current and correct.

Some of the most common reasons for underpayments arise from:

  • A misunderstanding or lack of awareness of the relevant Award or industrial instrument
  • A misunderstanding or lack of knowledge of the Fair Work Act 2010 or other industrial legislation
  • Lack of record keeping
  • Lack of pay slips to evidence payments
  • Lack of time sheets to accurately record hours
  • Failure to provide meal breaks, or to ensure that employees are directed to take meal breaks
  • Failure to pay overtime where applicable
  • Failure to pay correct loadings, penalties or allowances
  • Payments of fixed flat rates
  • Misclassification of employees
  • Incorrectly classifying employees as independent contractors
  • Failure to pay superannuation
  • Failure to pay entitlements such as annual leave, sick leave or long service leave
  • As well as providing advice and information on the correct rates of pay and classifications, the MTA can provide audits for your Industrial Relations or Human Resources areas, as well as a Payroll audit to check for potential underpayments.

The MTA is offering training on all aspects of workplace relations, including how to pay your staff correctly (next session on 22 April 2020), and Workplace Relations (next session on 12 May 2020).

If you need workplace relations or industrial relations advice or assistance or training, contact the WR team on (08) 8291 2000 or via email by clicking here.