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Incorrect salary expectation causes staff to quit and back-payments to be made

UnderpaymentsFebruary 5, 2015

Incorrect salary expectation causes staff to quit and back-payments to be made

An Adelaide business, Longridge Group Pty Ltd, hired staff on a commission based salary with an alluring pay package detailed in the initial job description. Two employees fell for the false expectation of an “earning structure that doesn’t limit earnings – 120k++”. Little did the employees know that taking the job would result in an “inadvertent breach of workplace laws” and the failure of earning even the minimum wage!

Both business men were highly educated and well qualified for their roles in sales. They both also worked managing display villages, answering business inquiries and being the face of Longridge. The first employee had an MBA and 22 years’ experience in commercial sales and marketing, the other, had qualifications in real estate, a certificate in building and construction, and had previously been a sales consultant in the building industry. Both quit when they did not receive the expected remuneration outlined in the job description.

The commission based salary was a breach in workplace laws because the employer failed to follow the required Miscellaneous Award. Modern awards are put in place to ensure that all employees are paid at least the minimum wage. Unfortunately the employees did not make enough sales to meet the minimum wage. The first employee quit after 10 months after only signing four customers to building contracts, earning commissions totalling $6704. He should have been paid $20,013. The second employee only lasted six months after “not being able to sell any homes and not being paid anything at all”. He should have been paid $11,647.

Both employees were financially reliant on their wives and obviously experienced hardship during their employment. Longridge Group Pty Ltd was forced to back pay the staff in full and change their employment procedures to be compliant with workplace obligations.

If you are an employer and are unsure if you are paying your staff under the correct modern award or if you have any inquiries relating to modern awards give Employsure a call on 1300 651 415. Employsure provides employers with the answers to all employment questions, big or small. When employers get it wrong Employsure is here to advise and implement solutions to get small businesses back on track.

*Information sourced via the Fair Work Ombudsman website.

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