Most employers genuinely want to do the right thing by their employees and are confident that they are pay well above award rates. Unfortunately, we often see businesses that are unknowingly falling below the minimum award rates for some of their employees.
It’s all too easy to inadvertently under-pay some employees, with some roles difficult to correctly classify within the relevant award. Other times, we see confusion around how to apply shift work penalty rates, misinterpreting the specific details around meals and breaks required and leave loading entitlements can be easily misunderstood. These seemingly small aspects of the award entitlements can add up over time and if not caught early can leave some employers with hefty back payments to employees.
Are you paying your employees correctly?
One of the most common areas we see employers being caught out is for not paying overtime for employees working a 40 hour week. With the National Employment Standards dictating that a full time work week is equivalent to 38 hours, under many awards, additional hours worked over and above this number are considered overtime and attract overtime rates.
Another situation that we frequently come across is employers who were initially paying employees well above award rates but haven’t been increasing rates sufficiently with the annual rate increase, or haven’t factored in their employees advancing to a higher-level classification in the award as their role responsibilities and experience grows. Over time, these well-intentioned employers can end up paying well below the current minimum pay rates that apply to their employees.
Big businesses are now paying up
Small and medium size businesses are certainly not the only ones finding it difficult to keep up with the complexities of award classifications and pay rates.
- The Australian Broadcasting Corporation has agreed to pay $600,000 and backpay hundreds of employees after underpaying them more than $12 million over six years.
- Woolworths has revealed it will face one-off costs of nearly $600 million this financial year after identifying staff underpayments; and
- Qantas is paying back millions of dollars to hundreds of workers it underpaid for up to eight years between 2011 and 2019.
Annual minimum award rate increases
Each year the Fair Work Commission conducts a wage review and sets new minimum pay rates. This week, incredibly, the Commission announced a 1.75% increase to minimum wages. This will apply to all award wages and will be applied in 3 stages, from 1st of July 2020, 1st November 2020 and 1st February 2020, for different industries and occupations.
Avoid the risk
Businesses can avoid the risks of a back-pay claim or of a fair work audit uncovering accidental underpayments by being proactive and arranging an independent audit of their employees’ pay rates and entitlements.
Cornerstone HR carries out pay audits for many businesses across a variety of industries, reviewing roles to ensure that they are allocated to the correct award and level, and providing advice around minimum pay and entitlements specific to each role.
Where our audit uncovers any concerning underpayments, we work in confidence with the employer to appropriately manage this, and support the employer to remedy the situation in a sensitive manner.
Ensure you are meeting your obligations as an employer and contact us for a compliance check today.