Reports today reveal that supermarket giant, Woolworths self-discovered underpayments over the last nine years with repayments expected to cost up to $300 million. The breach was discovered during a review prompted by the implementation of a new enterprise agreement with salaried employees.
The news today corresponds with the recent release of the Fair Work Ombudsman’s annual report revealing over $40 million was recovered in underpayments – the highest volume it has ever recovered in a single financial year.
Prompting calls for change, leading workplace relations firm Employsure says all businesses – large and small – need to be extra vigilant about their compliance with employee pay and entitlements.
Managing Director of Employsure, Ed Mallett said, the news of large businesses getting it wrong was indicative that “Both giants and the ‘little guy’ are equally struggling to navigate the minefield that is employment relations”.
Illustrating Australia’s workplace system failure, Mr Mallett asks, “If a business on the scale of Woolworths’ size with access to resources, as well as unions to keep it accountable, has made an error, how can regulators expect small businesses to get it right? The root of the problem is therefore in the legislation – not all employers should be branded as ‘wage thieves.’ Often, they make simple, honest mistakes because the system is far too complex.”
In addition, “Unlike larger businesses, small businesses do not have access to the expertise necessary to navigate the complexities of the Fair Work Act, where there are very narrow margins for error. Yet, small businesses make up more than 97% of all Australian businesses and employ more than 5.5 million people1.”
“The small business owner invariably handles all operational and legislative requirements, which include administration workplace relations obligations. They are not HR or legal experts and do not have HR departments, legal departments or finance departments. Put simply, the workplace relations system is too complex and time consuming for Australian businesses.”
Mr Mallett explains this is why Employsure has been busier than ever, “Each year, Employsure takes more than 267,000 calls, with 23% relating to employee wages and entitlements alone. Daily, we take calls from employers confused by what they are required to do to meet the requirements of the Fair Work Act leaving themselves exposed to penalties, fines, and serious legal costs.”
“We are educating and informing employers of their obligations in creating fair and safe workplaces is making an impact in more ways than ever before: it’s the difference between a business that is enabled to grow and a business that neglects their employees and therefore suffers the consequences of getting it wrong. We focus on advising employers, making the complex simple, so they can meet their obligations – which is fundamental to their business success.”
According to research commissioned by Employsure in 2017-18, only 1 in 3 small business employers are confident they are compliant with the Fair Work Act. Further, 1 in 5 admit they know very little or nothing at all about the Fair Work Act and 1 in 4 said they found it difficult to calculate the correct pay, entitlements, and interpret the Modern Awards for their business. In addition, only 10 per cent of managers said they were confident they understood the Fair Work Act.
According to Mr Mallett, “There has been a growing need to reform the system for small businesses that find themselves caught in the web of complexity that is expensive, time-consuming, and poorly explained by regulators.”
“Our views are that government should make practical and realistic reforms that attempt to make it simpler for businesses to do the right thing and build their confidence to employ, which is what the economy needs.”
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