A spate of wage theft accusations has swept across Australia, leaving in its wake damaged reputations and millions in back wages. From the small Barry Cafe in Northcote to cosmetics giant Lush, employment practices, especially involving overtime pay, have been called into question. Some smaller businesses have also come under fire, mainly in the hospitality industry, where experts say wage theft and exploitation are rife. In the mad scramble to resolve these accusations, two questions emerge: why does wage theft happen, and how do we solve it?
Complex Awards system blamed
In the aftermath of a street protest by the former employees of Barry Cafe in Northcote, owner Anne Petroulias said a lack of understanding about the awards system led to underpayment. She admitted they were unaware of the wage rates, and thought weekend penalty rates could be traded off for staff meals. “My brother looked on Google, and got the wage rates. I know we did wrong and we want to rectify anything.”
Could it be that the complex award system is the root cause? Chamber of Commerce Chief Executive Greg Bicknell thinks it is a major factor. “The award system is quite complex for small businesses to use,” he said. Recent Fair Work investigations seem to support this. A cafe in Darwin was found to have underpaid three employees a total of $4,988 because they misinterpreted the classification descriptions under the award.
It’s not just small businesses, however, as even the popular cosmetics store Lush wasn’t immune. Last month, they committed to paying back $2 million to 5,000 workers. The massive breach, according to director Peta Granger, was the result of inefficiencies in its payroll system. during the 2010 transition to the system of Modern Awards.
More recently, the Super Retail group declared they will pay $7.9 million in back wages to 4,500 staff members. According to Managing Director Peter Birtles, an internal review revealed employees were not paid under the correct award. There was also an inconsistent approach in how time in lieu, overtime payments and allowances were applied. "This was a genuine mistake that we deeply regret,” he emphasized.
Dire consequences for businesses
The reality, however, is that ignorance of the Fair Work Act will not shield an employer from its consequences. Last May, employees of Burch & Purchese Sweet Studio and Vue de Monde began to sue for back payments after allegedly working for more than 50 hours a week, for just 38 hours of pay, due to the incorrect application of annualised salaries. The owners of the restaurants, celebrity chefs Darren Purchese and Shannon Bennett, risk damaging not just their own brand, but also their many affiliations, such as MasterChef Australia.
Indeed, the price is not just financial, because reputations can quickly be lost in the controversies. Recall that last year, another celebrity chef and MasterChef Australia judge George Calombaris apologised after his restaurant group was caught underpaying 160 staff members a total of up to $2.6 million. Unsurprisingly, Calombaris’ professional credibility as a judge was questioned, and the incident is likely to cast a long shadow on his career moving forward.
And it’s not just the owner or proprietor’s personal brand at risk, because the businesses’ reputation as an employer is too. The spotlight on underpaying businesses revealed a slew of other unethical practices. The fixed pay at popular travel retailer Flight Centre, for instance, was revealed to be $4,000 below minimum wage. The rest of their legally mandated pay was being made from commissions. Employees also complained of rare breaks and unpaid overtime, likely discouraging others to pursue a career with them. And without the best people, there is no way for a business to succeed.
Beyond payment of backwages, governments are also now considering criminalising wage theft. Queensland’s Palaszczuk government began hearings last Thursday after being contacted by 169 people to detail cases of wage theft. Victoria's Labor Government has also promised to introduce laws targeting employers who underpay their workers, with hefty penalties of up to 10 years in jail.
Using tech to comply with Modern Awards
While Fair Work Commission president Iain Ross admits significant improvements can be made to make understanding awards easier, businesses need to comply with the current system, and fast. There is no question that the complexity of modern awards, and the immense administrative work required, cost a lot of time, money, and effort to get right. According to the Australian Payroll Association’s 2018 Payroll Benchmarking Report, it costs an average of $36.30 to produce a single payslip for companies with less than 200 employees. Superannuation and tax policies also change, and some employers get left behind.
But times have changed, and businesses are no longer limited to old, unwieldy methods of complying with various laws. Automation, or the technology to implement processes with little to no human assistance, has been introduced to many companies around the world. Businesses subscribed to automation software are able to use an impartial system that monitors time and attendance, tracks employee rosters, and applies modern awards.
One such software is Tanda, whose library of modern awards automates payroll and wage calculation with minimal effort from administrative staff. Investing in time and attendance software ensures that businesses do not make the same mistakes that are now costing others millions. The revolution has begun, and it is expected that many more will follow. In fact, research from Willis Towers Watson found that workplace automation is expected to surge in the next three years.
Empower staff, improve business
The responsibility to pay staff correctly falls squarely on the shoulders of employers, whether they’re running a large retail chain or a small neighborhood cafe. And indeed, companies can insure themselves against controversy down the line by investing in time and attendance software. However, that’s not the only reason to do it. A fair system builds trust among employees. It empowers them to do their best in their respective roles. It’s a win-win situation, because it maximises the bottom line without defrauding the front line and ruining the brand.
When done correctly, time and attendance automation means there would no longer be a need for staff to protest on the streets, or form digital unions to fight wage theft. Violations would be all but forgotten, because compliance would be done automatically and accurately, every time. Automation can spell success for your workforce, and ultimately, your business, in more ways than one. The recent spike in accusations has already drawn attention to the weakness in how companies compute wages; now it’s time to solve it.
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