Wage Theft – How can SMEs get it right if big businesses can’t?

Published October 20, 2020 (last updated January 25, 2022) -

The latest wage theft data from the Fair Work Ombudsman is further proof small businesses need more protection and guidance when paying their workers, according to Employsure, Australia’s largest workplace relations advisor.

The FWO has revealed it recovered more than $123m for 25,583 workers last financial year, after companies failed to pay their staff properly. The figure is three times greater than the previous period.

Most of the underpayments reportedly came from big businesses that failed to properly record hours worked, had old payroll systems, or didn’t apply enterprise agreements properly to the relevant Awards.

Half of the claims however, related to SMEs in the restaurant, café and fast-food sector.

“Underpayment has always been a big issue, but now in the age of COVID-19, there is more pressure than ever being placed on businesses to correctly pay their staff,” said Employsure Managing Director Ed Mallett.

“We’re seeing these big companies with immense HR resources fail to get wages correct. What hope is there for small businesses who don’t have those extra resources at their disposal?”

The Australian Government has talked about criminalising wage theft. In Queensland, employers found to be deliberately underpaying their staff could be jailed for up to 10 years, or fined almost $1 million, under new laws passed through State Parliament.

Following talks between unions and employer groups, a deal has been made to not penalise employers who inadvertently underpay their workers. Industrial Relations Minister Christian Porter is in the process of working on a bill of changes to the country’s IR system, which is expected to be revealed before the end of the year.

“We welcome any changes to the country’s complex IR system that make it easier and safer for SMEs to operate. These are hardworking people who have already lost so much this year from the COVID-19 pandemic. Unless there is change, business owners will always be at risk,” continued Mr Mallett.

“There are all manner of systems trying to catch underpayment, but very few that try to prevent it in the first place. Sometimes underpayment is deliberate, other times it is accidental — but whatever the cause, the outcome is the same: intense scrutiny and hefty fines from the Fair Work Ombudsman.

“Of the $123m recovered by the FWO last financial year, $90m of that was self-reported by employers who realised their error. This figure is further proof many employers are making honest mistakes.

“We object to the characterisation of small business owners as thieves. They need protection in this difficult system. If big business can’t get it right, how can a small business?”

Further enquiries:

Matthew Bridges

[email protected]

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