By Baidy Laffan
06 February 2020
But noble intentions do not excuse businesses from the result and all businesses are treated the same in the eyes of the regulator.
Let’s take the recent example of Woolworths. The company underpaid some of their 5,700 department managers across their retail network dating back to 2010. The $300 million underpayments arose from differences in the employee’s salary under an Enterprise Agreement and what they would have otherwise earned under the Award. It is fair to say, Woolworths did not intentionally set out to underpay their employees, and it is equally fair to say that this error resulted from (a) someone not reading the Agreement closely enough nor ever bothering to check and (b) poor systems and monitoring.
If it wasn’t intentional, is it acceptable? No, culturally and legally Australians believe in a “fair go” and the truth of the matter is that dollars and cents matter to the employees affected no matter how small.
Woolworths joins a growing list of Australia’s most recognisable brands that are being caught out by wage underpayment including Wesfarmers, Qantas, the Commonwealth Bank, Super Retail Group. Wage underpayment is no longer the domain of gritty corner shops or service stations. Many of these brands have been caught out by complex issues stemming from a handful of clauses in the Agreements and Awards.
So, how do you get it wrong when you have hundreds of people in your Human Resources and Payroll team?
The truth is that payroll is not simple; it is complex, dynamic and fluid. Some nuances we have observed include:
- The legacy of state-based Award systems
- Limitations of technology
- Complexity of Awards
- Changing focus of the Regulators (FWO & ATO)
- Complacency around payroll systems
- Payroll being dynamic and continuously evolving
Businesses need to be considering these nuances when looking at their own recruitment and payroll systems. The best way to get comfort over your compliance with workplace obligations and your interpretation with Awards and Agreements is through an audit that contemplates and responds to these nuances. The investment in a workplace compliance audit can save you millions in future underpayment and protect your biggest asset – your reputation.
We continue to support Australia’s high-profile brands with their workplace compliance and brand protection. Get in touch with PKF Audit & Assurance to see how we can provide comfort and clarity in your compliance.