AUSTRALIA HAS A WAGE THEFT EPIDEMIC: INSURANCE FOR WAGE THEFT FINES — WILL THAT TOO SOON BE PROHIBITIED

What is Wage Theft?

Wage theft is the colloquial term that describes under- or non-payment of minimum wages and entitlements that are rightfully owed to a worker.

Why is Wage Theft so prevalent?

Why is it that such well-resourced companies like Woolworths, Bunnings, Caltex and Qantas have got it so wrong? Is it that underpayments easily come about or is it more that there is the need for ongoing vigilance in ensuring strict compliance?

What is being done to address the issue?

The extent of non-compliance by employers perhaps suggests that there are profound problems with the enforcement of wage laws in Australia. Maybe it is a case of employers perceiving that the risk of getting caught and facing any significant consequences for their non-compliance are so low that they are undeterred to stop their unlawful behaviour.

Will employers be able to insure themselves against wage theft in the future?

It is useful at this point to consider the new work health and safety laws recently passed in Western Australia, enshrined in the Work Health and Safety Act 2020 (WHS Act).

What can employers do?

It is incumbent on businesses to take a proactive approach to minimising risk and exposure to wage theft.

  • if an employee is covered by a modern award, consider the recent annualised salary changes and undertake regular reviews of annualised salary arrangements to ensure that employees are receiving at least the award minimum taking into account their actual hours of work and the projected hours used when setting rates of pay;
  • undertake regular periodic reviews of modern award classifications and job descriptions and pay rates. Given the 1.75% increase to minimum rates of pay in Group 2 Awards as at 1 November 2020 (see our October article), it is therefore timely, for businesses to conduct an audit to ensure that workers on annual salary arrangements are being paid sufficiently and rates of pay align with the award increase of 1.75%;
  • ensure that all employment contracts are up to date and attend to any necessary amendments; and
  • keep accurate records, including time and wages records such as timesheets and leave records — this documentary evidence will be critical if you have the misfortune of being investigated by the FWO.

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