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Wesfarmers admits to $15m in staff underpayments

news
October 2 2019

By Leigh Johnston

Perth conglomerate Wesfarmers is the latest big business to admit underpayment issues, revealing it has underpaid workers by an estimated $15m after almost a decade of payroll errors.

The blunder is estimated to affect up to 6,000 of their Australian employees, both past and present, employed under Wesfarmer’s brands Blackwoods, Coregas, Greencap and Workwear Group since 2010.

Close to 50 per cent of the underpayment was due to superannuation on loadings and allowances and was discovered after a routine payroll review took place.

“The Fair Work Ombudsman will be holding Wesfarmers to account after self-disclosing significant underpayment of its workers,” Sandra Parker from the Fair Work Ombudsman said in a statement.

“Each week, another large company is publicly admitting that they failed to ensure staff are receiving their lawful entitlements. This is simply not good enough. Companies will be held accountable for breaching workplace laws.

“Companies and their Boards are on notice that we will consider the full range of enforcement options available under the Fair Work Act, including litigation where appropriate,” Ms Parker said.

Other big businesses that have been caught in the underpayment scandal include Sunglass Hut, 7-Eleven, Caltex and Domino’s, just to name a few.

Underpayment is a big issue in Australia at the moment and as another underpayment controversy unfolds by a major retailer, it puts into question that if a company the size of Wesfarmers can’t get it right, how can small business owners?

What’s the solution to underpayment?

Understanding minimum wages is another element businesses often get wrong. As of 1 July 2019, in Australia, the minimum wage for an adult permanent full-time or part-time is $19.49 per hour, or $740.80 per 38-hour week. When it comes to working out your employees’ minimum wage, the relevant Award, Agreement and contract needs to be considered.

Having an understanding of penalty rates, as well as paying an employee overtime and allowances are other elements a business needs to understand in order to pay their employees correctly. Each of the three components can also differ depending on the industry and job, the contract and  any applicable Modern Award or Agreement.

Staying informed and having up-to-date advice is paramount to protecting your business and ensuring staff is paid correctly. Wage rates and obligations can change from time to time, in particularly around the new financial year, and it is up to the employee to keep up-to-date.