With the wage theft laws enacted in 2023, employers who intentionally underpay their employees can now be prosecuted criminally from 1 January 2025.
The new offence and civil penalties are part of several changes to workplace laws introduced under the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 (Cth) and Fair Work Legislation Amendment (Closing Loopholes) Act 2024 (Cth) respectively.
The Fair Work Voluntary Small Business Wage Compliance Code helps employers understand their obligations and minimise risks.
The Fair Work Ombudsman (FWO) introduced the Voluntary Small Business Wage Compliance Code, designed to empower employers to understand their responsibilities and effectively reduce risks. Although the Fair Work Voluntary Small Business Wage Compliance Code is provided explicitly for small businesses with fewer than 15 employees, it offers valuable guidance that can benefit all employers. A small business employer's conduct will not be referred for potential criminal prosecution if Fair Work is satisfied that the employer complies with the Code and that an honest mistake has been made.
What are the key steps for employers to take to avoid wage theft prosecution?
Employers can take several straightforward steps to reduce the risk of non-compliance and avoid potential penalties. Some of these measures may already be in place.
Employers must adopt a proactive approach rather than a reactive response to ensure their employment compliance obligations are met.
Here are some recommended steps to consider:
Understand Fair Work pay and entitlements, ensuring employees are correctly paid under the Fair Work Act or an industrial instrument (such as an Award or Agreement). The Fair Work Ombudsman offers numerous tools and services for employers to assist in meeting compliance obligations.
Maintain detailed Employee payroll information that is easily accessible to the Fair Work Inspectors.
Maintain accurate Time and Attendance records.
Seek professional guidance from qualified sources.
Subscribe to resources that provide information and updates regarding Legislative changes, such as Industry Associations.
Promptly address underpayments immediately upon identification.
Using technology wherever possible to assist in meeting your compliance obligations.
Our automated Award-centric payroll software resolves problems with the set, forget, and neglect mindset.
While technology and automation do not resolve all compliance issues, they serve as practical tools for mitigating risks. Since 2022 e-PayDay Go® has offered powerful functionality for keeping current with the correct hourly rates. Our award-focused automated payroll software effectively tackles the challenges of a "set it and forget it" approach, ensuring employers stay engaged and responsive to their payroll compliance needs. The opportunity to neglect responsibilities is minimised.
SET
When adding an employee, all available Modern Awards and Classifications are available in real-time, directly from Fair Work. The Fair Work P.A.C.T. (Payment and Conditions Tool) and Find My Award are also easily accessible within e-PayDay Go®. Once the appropriate Award is determined, choosing the Award and Classification from the provided list is simple. The Award Hourly rate is automatically prefilled and can be easily changed.
FORGET
This is a common mistake caused by a lack of time or resources, but it can be addressed with the right features. Reminders and automated notifications within e-PayDay Go® are simple but effective tools for staying on top of Payroll tasks.
NEGLECT
Our Update Awards Automation Tool continually monitors the Modern Awards and immediately notifies employers of changes.
This versatile built-in functionality also streamlines the complex process of adjusting wages in response to FWC's Wage changes. Employers can also decide whether their above-award rate should be adjusted to reflect the increase or absorbed.
Ensuring compliance with Fair Work is made straightforward and manageable.
We have exceeded the FWO requirements by providing the Award and Classification under which the employees are paid, identified on their pay slips. This offers additional assurance and the capability to verify that the employee is being paid accurately, as this information is the foundation of the pay calculations.
If an Enterprise or Registered Agreement is in place, it is shown on the pay slip along with the name of the underpinning Award.
Pay slips also include a link to Fair Work, providing employees with relevant compliance information.
These features are all included to effortlessly ensure employers can meet the Fair Work Voluntary Small Business Wage Compliance Code and assist in meeting the ATO payroll governance obligations.
We assist employers in achieving compliance with Fair Work regulations and fulfilling their payroll governance obligations recommended by the Australian Taxation Office (ATO). All our payroll plans include these features, including our free offering for employers with fewer than four employees.
We recommend reviewing our disclaimer concerning the content of this post to remain informed and make suitable decisions for your circumstances.
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