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If you feel like the demands and complexities being placed upon anyone running a business these days are ever increasing, you are not alone. It can feel like everywhere you turn things are becoming less straightforward and harder to deal with.

This is particularly so when it comes to employing staff. The employment system is a veritable minefield and becoming more and more difficult to navigate, with a range of State and Federal laws to have to contend with. One particularly topical and significant issue is the under payment of wages.

There has been a lot of press in recent years in respect of alleged large scale underpayment of wages by some very high profile people and companies, including Woolworths, Coles and companies associated with former MasterChef host, George Calombaris. However, the issue isn’t limited to companies of this sort of scale- it can impact any business and the consequences could be significant, both from a financial and reputation standpoint.

A recent report published by PwC estimates that underpayment of workers’ entitlements in Australia totals $1.35 billion per year. In most instances underpayments occur due to genuine mistakes, often caused by the complexity of the system. It was interesting to note that National Farmers’ Federation President Fiona Simson recently commented that while it was troubling to see large portions of businesses failing to meet their legal requirements, most farmers intend to do the right thing but sometimes get caught up in the complexity of employment laws.

As an example, in recent reports the horticulture industry has been identified as a high risk industry for underpayment of wages and entitlements. In South Australia, the horticulture industry has around 37,000 workers, with a majority of those being seasonal. Additionally, more than 50 per cent of the workforce is on temporary visas, including Working Holiday and Seasonal Worker Program.

In April, changes to the Horticulture Award came into effect following a decision of the Fair Work Commission. Before the decision, workers were not entitled to receive a guaranteed minimum hourly rate when engaged in piecework for picking fruit and the like and, in some circumstances, workers were earning below the minimum wage. The changes have been put in place to ensure that workers receive a guaranteed minimum wage even if their piece-rate payment (based on the quantum of good picked) is below the hourly rate.

The issue for many businesses is that this sort of change is something that could be easily missed and, as a result, not implemented and potentially lead to underpayment of wages.

To give this some context, in the 2021-2022 financial year alone, the Fair Work Ombudsman recovered over $500 million in unpaid wages and entitlements for Australian workers. The Ombudsman has identified 15 regional hotspots that will be targeted over the next two years to ensure compliance with minimum wages and conditions. The Ombudsman inspected over 30 Riverland businesses earlier this year and issued seven infringement notices, mainly relating to a failure to make and keep records.

In addition to on the spot infringement notices, under the Commonwealth’s Fair Work Act 2009 a business that underpays their workers can face fines of up to $13,320 for each offence committed by an individual and $66,600 for each offence committed by a company. The fines increase to $133,200 and $666,000 respectively for serious contraventions.

The potential consequences of non-compliance are substantial and it is therefore important that employers are aware of their employment and workplace obligations. As is the case in most areas, simply pleading ignorance of the law will not be enough- there is an expectation that businesses keep on top of their obligations to all staff that they employ.

This article was published in The Stock Journal on 13 October, 2022.