Double-check you’re not underpaying staff or risk FWO wrath

by 12 Jan 2012

An official audit conducted by the Fair Work Ombudsman (FWO) has found that more than a quarter of Australian retailers have been underpaying their staff by failing to record their hours and rate of pay correctly.

In a report released this week, FWO determined that after conducting random inspections of some 1,900 businesses since November last year, 26% were in breach of workplace regulations and laws, though many were doing so unwittingly.

So far retailers have been ordered to pay $585,000 back to employees, and some 40% of the payout was from NSW employers alone.

However the Australian Retailers Association has warned the payouts thus far could be just the tip of the iceberg.

The industry body said many of the 140,000 retail businesses registered in Australia wrongly classified staff under the changed industrial relations regime.

Executive director of the retailers association, Russell Zimmerman, said the industry needed a massive re-education program to bring businesses, and particularly smaller-sized operations, up to speed to prevent further under-payment of wages to the sector's 1.2m employees.

Zimmerman noted that the ombudsman said many retailers underpay as the result of a lack of information or they make mistakes interpreting the information they have.

He added that payroll remains a difficult process, and said the results of the audit show retailers are obviously lacking education on what’s expected.

The findings come just months after retail giant Super A-Mart was ordered to repay more than $1.3m to almost 900 workers after Fair Work Australia (FWA) recommended a self-audit following a complaint.

In a landmark payout, the retailer, which operates more than 30 stores throughout Australia, calculated it had underpaid 877 employees a total of $1.376m between March, 2006 and March, 2010.

Super A-Mart told the Fair Work Ombudsman (FWO) the breaches occurred because of a “breakdown in management communication”.

Nicholas Wilson from FWO said the case highlights that a small mistake affecting a large workforce over an extended period of time can result in a hefty bill for back-payment of wages and that it is not just small businesses without HR or industrial relations experience that can run into trouble.

Wilson added that the contravention points to the need for all employers, large and small, to constantly check they are meeting their obligations to their staff and the FWO is a good place to start.


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