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Businesses underpaying employees – criminalisation of wage theft?

Employment Law

Are you underpaying your employees and if so, what are the consequences?

The Fair Work Ombudsman (“the FWO”) has wide reaching powers and can conduct workplace investigations regarding compliance with workplace laws.

Following investigations regarding the underpayment of employees, the FWO can:

  1. Issue a contravention letter advising an employer of the laws broken and how to comply;
  2. Issue a letter of caution which is a formal warning regarding the laws broken (and can be relied upon if the employer does not comply with the laws in the future);
  3. Issue a compliance notice regarding compliance with broken laws (and if the notice is not complied with, an employer can be taken to Court and fined);
  4. Enter into an enforceable undertaking with an employer (which if not complied with, can result in legal proceedings being commenced);
  5. Enter into a compliance partnership with an employer to ensure employees are receiving the correct pay and entitlements; and
  6. Commence legal proceedings against an employer and also relevant persons involved in the contravention (including directors, human resource managers/officers, an accountant and an associated business).

Recent Investigations

The FWO has conducted a number of investigations recently which include:

Underpayment of a Filipino nanny – proceedings have been commenced by the FWO in the Federal Court of Australia to recover an underpayment of $155,178.

Endota Day Spa – allegations were made by the holders of 457 visas that the company was deducting visa-related costs from their pays.  On investigation by the FWO, enforceable undertakings were entered into by the employer (and the director of the employer) and monies were recovered by FWO and re-paid to workers.

Meatball and Wine Bar – was fined $31,320 for underpaying employees.

George Calombaris (Masterchef Judge) – paid back over $7.8 million in unpaid wages, entered into enforceable undertakings and also made a $200,000 “contrition” payment to the government. In addition, his company is also required to train staff including conducting regular audits, implementing new compliance systems and provide a written apology via various media outlets.

The Government’s Position

The Prime Minister of Australia has indicated that exploitation of workers is an issue currently being focused on by the Attorney General and new laws may criminalise wage theft.

What can your business do to avoid being caught out?

  1. Understand the basis of employment of the employee and the relevant award and enterprise agreement coverage (if applicable);
  2. Be familiar with employee entitlements;
  3. Conduct regular reviews and audits of employees to ensure you are fully complying with your obligations in respect of correct payments; and
  4. Ask us to assist with a compliance program for your business.

If you have any issue or concern regarding payment of your employees, contact the experienced employment lawyers at Atkinson Vinden Lawyers today.