What does a record amount of underpayments mean for businesses?

On 8 August 2022, the Fair Work Ombudsman (FWO) has announced that a record $532 million in unpaid wages and entitlements was recovered for more than 384,000 workers in 2021-22. The recovered amount is more than three times more than the record 2020-21 amount of $148 million and has benefited five times more workers within Australia.

This demonstrates the increased effectiveness of the FWO in its ability to enforce workplace compliance, but is also an indication of how widespread the problem of worker underpayment has become within Australia.

The Deputy of the Fair Work Ombudsman, Kristen Hannah, stated that “large-scale corporate non-compliance” was often driven by “ineffective governance, a lack of investment in payroll systems, expertise and auditing and, in some cases, by complacency or the adoption of high-risk workplace relations strategies without adequate controls in place”.

Hannah also stated that “we still believe it is CEOs and boards that must be taking the lead in setting a culture of compliance in their companies” and “the number of self-reports of underpayments from large corporates has grown significantly.” Currently, the FWO has about 50 investigations underway into large corporates that have self-reported underpayments.

In 2021-22, the FWO filed a record 137 litigations, almost double the number of new litigations from the year before.

The new litigations included action against Coles over the alleged underpayment of almost 8000 employees by over $115 million, and against the Commonwealth Bank and CommSec in relation to the alleged underpayment of more than 7000 employees by more than $16 million.

Overall, this is a great result, not only for workers who are being paid their minimum entitlements, but also for businesses who pay correctly, as now they won’t be disadvantaged as a result for complying with their legal requirements.

How can ER Strategies help?

Payroll audits are a core part of our service offerings here at ER Strategies and have been since we realised the many issues that businesses were having with complying with Australian employment laws. We perform hundreds of payroll audits every year and so far, we’ve checked over $630 million in total payroll.

If you are interested in our payroll audit services, or just want to find out a bit more, get in contact with us here, or call us on 1300 55 66 37.


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