Fair Work Targets Small Business Wage Fraud

You’ve read the headline news stories – big hitters like Commonwealth Bank, Qantas, Bunnings, Rebel Sport, all guilty of underpaying their staff to the tune of millions. Whether intentional wage theft or genuine miscalculation, there’s no doubt that getting employee pays wrong can be a costly mistake. Just ask Woolworths… they’ve had to set aside a whopping $315million to cover expected underpayments!

But it’s not just big businesses that are under the microscope now. Several changes to Award Wages have already come into effect this year, and with more to come shortly, the Fair Work Commission has small businesses in its sights.

So how can you ensure your business is compliant?

First, you need to know whether your employees are impacted.

Fair Work states that employers need to record the annual wage arrangement in writing and give employees a copy. This has to include:

  • The annual wage that will be paid;
  • Which award entitlements are included in the annual wage;
  • How the annual wage has been calculated, including any assumptions used in the calculation;
  • The maximum (or ‘outer limit’) number of penalty hours and overtime hours the employee can work in a pay period or roster cycle without extra payment.

The employer must also record the employee’s:

  • starting and finishing times;
  • unpaid breaks taken.

Employees have to acknowledge the record of hours they’ve worked is correct by signing at the end of every pay period or roster cycle. This record is then used for annual reconciliations, where the annual amount that would be have been payable under the Award is calculated, compared to the annualised wage paid. Any shortfall must be paid within 14 days.

It’s well worth taking the time and effort to get employee pay right from the start – not only are you legally obliged, but it could save you a lot of headache (and cash) down the track!

If you’re unsure whether recent or coming changes to award wages will affect your business, call us on 9887 8751 or send us an email for assistance.