COVID-19 took the spotlight off wage theft, but Australia still has an underpayment problem

Pay your staff what they’re owed. It is a simple and, of course, correct statement. However, the equally simple and correct response is, easier said than done. That is not an excuse and it’s certainly not going to assist with any run-in with the Fair Work Ombudsman, but it’s an accurate reflection of Australia’s underpayment problem.

Before COVID-19, there was a different kind of pandemic rocking Australian workplaces: underpayment scandals. A week could not go by without another headline concerning a business failing to pay staff correctly. The issue hit some of our biggest employers, including Woolworths, Coles and Commonwealth Bank, and the underpayments escalated into the hundreds of millions in backpay. It sparked questions regarding how some of our most sophisticated employers got it so wrong. 

Was this wage theft?

The reality is Australia’s industrial system is complex. There’s the Fair Work Act, modern awards, and enterprise agreements just to start. They bring in a messy system of varying minimum wages, overtime, penalty rates, loadings and allowances.

When the laws are this intricate, it’s easy for companies to make a minor slip up. And when that occurs over a large workforce over a long period, the liability racks up.

While COVID-19 has taken some of the spotlight off this issue, it has not gone away. The Fair Work Ombudsman remains active in the area, investigating underpayment suspicions and litigating when they are found. Victoria has recently made wage theft a crime and other states are considering following suit.

Paying employees correctly must remain a top priority for employers, especially with a large portion of the workforce working from home or under flexible work arrangements, which makes it increasingly difficult to track hours of work and when they are performed.

While we can dream of a simpler IR system that makes life easier, particularly for smaller businesses, employers must invest in this issue before they become the next headline.