Ensure no surprises come Sunday: Voluntary wage audits may be for you

by 01 Mar 2012

While state workplace regulators enforce random compulsory wage audits to ensure employers comply with the minimum award requirements, many organisations are now voluntarily submitting to wage audits through the use of contractors to ensure they are in full compliance with pay requirements.

This week the Australian Tax Office (ATO) announced that in 2011 employers failed to pay more than half a billion dollars in superannuation to employees and will now have to find the money to back-pay.  

The workplace regulators are required by law to conduct regular wage auditing, and more and more businesses are investing in voluntary wage audits to ensure they are neither overpaying or underpaying. After several wage-related complaints were made against pizza chain Domino’s, for example, the company agreed to a national audit of the wages of 1,000 of its workforce of 11,000. It will audit a sample of employment records before providing a report to the workplace ombudsman later this month. CEO Don Meij said the pro-active approach is about ensuring they operate their business ethically and this can be communicated to valuable team members.

The move follows other voluntary wage audit undertakings by other large fast-food chains, including Red Rooster and McDonald’s. In a deal made with FWO, Red Rooster Foods and its franchisees agreed to self-audit employment records to ensure that 2,500 staff working for franchise outlets were being paid correctly, and to correct any issues it may find. McDonald’s also signed a Pro-Active Compliance Deed in mid-2011. A spokesperson from Red Rooster said employees at franchise stores have been advised of the program and invited to contact a workplace relations e-mail account set up by the company should they believe they are being underpaid. “Under the deed, Red Rooster acknowledges there are opportunities for continuous improvement in relation to its workplace practices and accepts responsibility for developing systems and processes to maintain ongoing compliance with Commonwealth workplace laws,” said the spokesperson.

In independent internal audits, firstly a review of the current industrial instrument that applies to the individual workforce – such as an award enterprise agreement or employment contract – is carried out. The audit would then typically involve reviewing the award classification to ensure the employee is classified at the correct level and receiving the correct pay rate, penalties and allowances, including the transitional items where appropriate.

Notably the ATO recently flagged the hospitality and real-estate industries as “higher-risk” sectors for not paying full superannuation entitlements, which are currently at least 9% to all staff. Other industries named included hairdressers and beauty specialists, building and construction companies, road freight groups, mechanics, and hotels and motels.

Related story: Heads roll at retail giant: Harsh lesson for payroll


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