There are many different reasons as to why a business may be employment non-compliant and/or underpay its employees. Often an important factor is the industry that a business operates in, which can impact on the systems they use or even how complicated their employment obligations can be.
One type of business that we have noticed is receiving an increasing amount of media attention around non-compliance issues are those operating in the Healthcare and Social Services industries, including those engaging with the National Disability Insurance Scheme (NDIS) which funds people with disabilities to engage the services of a business to assist them directly, as well as other ‘Not-For- Profit’ organisations.
The Fair Work Ombudsmen (FWO) has also noticed these issues within the Healthcare and Social Services sectors, which are amongst the largest employing industries in Australia. . The FWO has indicated that it is focusing on the Healthcare and Social Services sectors due to the recent growth created by the NDIS, which has created an influx of new businesses entering the market, many of which don’t have the necessary training to ensure their employment compliance.
FWO Reports and Investigations
In a recent report put together by the Fair Work Ombudsmen, they found that 48% of the NDIS related businesses that had been investigated were non-compliant. The majority of the non-compliance issues were underpaying employees, however there were also issues found in inadequate record keeping and breaches of monetary and non-monetary obligations. The most common breaches identified were:
- Minimum hourly rate
- Weekend penalties
- Travel allowance
- Other allowances
In one case, an operator of a disability services company underpaid their employees over $1.6 m between 2013 and 2020. This was self-reported by the organisation and was found to be due to –
- inadequate governance and processes for ensuring compliance,
- annualised salaries being too low to meet the requirements for the job, and
- some employees being incorrectly classified as award free.
More specifically, issues included –
- incorrect use of time-off in lieu of overtime and penalty rates,
- underpayments of the base rate,
- incorrect applications of on-call or sleepover provisions, and
- incorrectly allocating annual leave loading and allowances.
How ER Strategies Can Help
For one of the larger, well-established disability providers to make errors like this, it is clear how a new business unaware of the challenges in payroll compliance could also easily make mistakes. If you are operating in the healthcare and social assistance industry and feel unsure of your employment compliance obligations, get in contact with us at ER Strategies here. Our consultants are experts in the area and will be able to guide you in ensuring you are paying your employees correctly and your business is employment-compliant.