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UnderpaymentsAugust 3, 2015
The Fair Work Ombudsman (FWO) once again has cleaning contractors under their microscope. In follow up to its 2010 campaign, they are heavily focused on underpayments in the industry with Fair Work Inspectors having already checked the books of 578 contractors.
Incredibly, the results of these investigations revealed that 31% of these contractors were paying staff less than the minimum hourly rate. Other underpayments included incorrect or non-payment of penalty rates, overtime, casual loadings and allowances, or simply not paying employees for all hours worked. The FWO stated that paying employees correctly will go a long way in helping to create genuine competition for contracts, leading to a level playing field in the industry.
In this highly competitive industry, characterised by layers of subcontracting, slight margins and competitive tendering processes, employers need to understand their minimum obligations to employees. From here, they can then best manage wage costs while at the same time, minimise the risk of a claim being made against them.
Worryingly, 16% of the businesses found to be compliant with workplace obligations in 2010 were no longer compliant in this latest audit. The owners of small to medium sized businesses, like many in the contract cleaning sector, are so busy running their business they do not give these matters the attention they need and it is easy to get it wrong. Annual statutory wage increases, classifying employees correctly under the relevant Award or applying correct penalty rates are easily overlooked.
In reaction to a FWO investigation, Myer has recently thrown out their cleaning contractor as a result of such underpayments. This example shows that if employers who are not paying the correct rates and do not have the correct employment procedures in place it is not only bad for employees but also bad for business.
If you need guidance in applying the correct rates of pay and all other entitlements please call Employsure today on 1300 651 415. Changes to minimum wages and modern awards came into play on 1 July 2015, so don’t be caught in the dark.