With extensive media coverage over the last couple of months around staff underpayments and some of Australia’s largest companies declaring their errors – we at DFK Everalls have had several small businesses come to us, seeking advice.
Many are concerned an inadvertent error could lead to an unravelling of their business – and reputation.
A vast majority of businesses out there want to do the right thing – for their business and their employees. They want to avoid errors – and they want to ensure they have the right systems to do this.
We thought we would share this piece from the Canberra Business Chamber, that shares some insights into wage error – and some practical steps businesses can take to ensure they are getting it right.
Canberra Business Chamber believes that the language used to describe staff underpayments is often too strong and inflammatory.
Criminal Codes across Australia define theft as “dishonestly appropriating property belonging to another with the intention of permanently depriving the other of their property.”
The vast majority of underpayments to employees are errors that arise from genuine misunderstandings. They are generally caused by a complex and confusing industrial relations system. This is compounded by the complexity of commonly used payroll management systems.
Inadvertent errors multiplied across a few employees and/or an extended period of time can add up to big, headline grabbing numbers, but none-the-less, are still an inadvertent error, not theft.
One aspect not mentioned in media coverage is that SMEs frequently identify wage errors that have resulted in overpayments to employees. The recovery of overpayments by employers is very difficult. In the absence of voluntary co-operation from the employee, such overpayments can only be recovered through expensive legal action.
The awards categorisations and wage systems are extremely complex. The payroll software systems are also complex, and highly sensitive to changes and software updates.
Each modern award is set out differently to the next, and the language used varies significantly.
Approximately 97% of businesses in ACT are small businesses of fewer than 20 employees. Having a dedicated HR professional is neither practical nor financially viable. External bookkeepers and payroll process bureaus are often not informed of changes to an employee’s duties or status, leading to errors. They can only pay based on what they are advised, as they simply are not close enough to see any changes.
We know from recent cases of staff underpayments, even large companies with significant HR resources can make inadvertent errors. This indicates that ‘getting it right’ is extremely complex.
The Chamber has compiled this list of tips for businesses to ensure they keep on top of their obligations to staff
Ultimately, it is imperative that you are familiar with your award/s so that you can identify when errors may have been made in wages.