Wage theft is back in the news this month following reports of BHP underpaying 30,000 of its employees. These underpayments, dating back to 2010, were due to an average of six leave days being incorrectly deducted from affected employees. 

It’s the latest high-profile case to put wage theft under the spotlight. Commonwealth Bank and Commsec are currently under investigation by the Fair Work Ombudsman’s office, for allegedly underpaying 7000 employees by a total of $16 million. Super Retail Group, Qantas, Westpac and David Jones have also come under the Ombudsman’s microscope for alleged underpayments. 

“It's an issue that's not going away," Fair Work Ombudsman Sandra Parker told ABC Radio National. "On a positive note, it's good that the companies are waking up, it's good that they're auditing and it's good that they're making good. But it is taking a long time and it's a frustrating process." 

What is wage theft? 

Wage theft relates to the underpayment of an employee’s wages and conditions. This can include the non-payment of entitlements such as superannuation plus a failure to keep employment records. The Federal Government’s Fair Work Ombudsman has instigated investigations into claims of underpayment of wages among businesses across Australia. Furthermore, the Victoria Government has established its own authority to undertake similar prosecutions. 

Case examples

It is important to note that these investigative bodies have undertaken prosecutions against a range of Australian businesses. 

Many businesses will recall news headlines concerning underpaid workers at restaurants owned by celebrity chefs including Heston Blumenthal, Shannon Bennett, George Calombaris and Neil Perry, and franchises like 7-Eleven, Pizza Hut and Domino’s, as well as blue-chip companies including BHP, Suncorp, Bunnings, Coles, Commonwealth Bank, Qantas and Woolworths. Even institutions such as multiple universities and the ABC have faced investigation. 

Woolworths, after initially understating their estimated remediation between $200-$300 million, after due diligence investigations were estimated to be $620 million in underpayments. 

Smaller businesses have also been subject to investigation. For example, the Victorian regional restaurant Macedon Lounge is facing prosecution by the Victorian Wage Inspectorate for underpaying four staff members by $7000 – which included wages, penalty rates, and superannuation. If guilty, the owners could face up to 10 years’ jail and more than $1 million in fines. 

Federal government cracking down on wage theft 

Wage theft is an issue that all companies large and small need to be increasingly aware of, and not only because of the severe financial and reputational damage they can suffer if they are found guilty of it. The Federal Government is currently considering reforms that would follow in the footsteps of Victoria and Queensland in cracking down on wage theft. Those reforms could see individuals such as directors and HR managers facing imprisonment and penalties up to $825,000 per breach. 

Ensuring that every employee is paid correctly – which includes providing them with the correct leave entitlements, as well as penalty rates where applicable – is not merely a matter of organisational justice. It’s at the very foundation of businesses operating ethically and compliantly within the Australian employment landscape. 

Australian employment law is among the most complex in the world. What’s more, it recently has undergone the most significant changes since the introduction of the Fair Work Act in 2009. It is therefore more essential than ever to have rigorous checks and balances in place. A spot check or audit by an external consultant can be a good place to start. 

Bayside Group wage theft audit service 

With extensive knowledge of relevant awards, workplace agreements, contracts, and legislation, Bayside Group's skilled workplace relations team can audit your current processes to ensure you are not added to the growing list of companies in the media. Our audit service will help your company make an informed decision to avoid inadvertent breaches. 

It is important to note that your insurance coverage may not protect your business against either a potential civil or criminal wage theft underpayment claim. 

Our full suite of tailored workplace relations solutions and services 

The full range of services offered to our clients include: 

• Workplace code of conduct, policies and procedures 
• Workplace behaviour training 
• Wage theft audits 
• Workplace relations advice 
• Workplace investigations 
• Expert HR/IR secondment 

For further information, please contact Nick Wakeling, Manager Workforce Solutions.