
Ensuring Accurate Employee Payments
Ensuring Accurate Employee Payments: A Call to Action for Employers with new penalties now enforced.
Fair work has issued guidance emphasising the critical responsibility of employers to ensure accurate payment of employee wages and entitlements. This reminder is timely for businesses across all sectors to evaluate their payroll practices and compliance with workplace laws.
Key Expectations for Employers
- Proactive Measures: Businesses must actively ensure correct payments, covering salaries, allowances, superannuation, and deductions.
- Prompt Corrections: When underpayments are identified, immediate rectification is essential, along with addressing underlying causes such as payroll system errors.
- Self-Reporting: Significant underpayments should be reported to the Fair Work Ombudsman
- Comprehensive Frameworks: Employers must implement robust systems to comply with the Fair Work Act 2009, industrial instruments, and employment contracts, reducing the risk of underpayments.
Common Causes of Underpayments
- Incorrect application of industrial awards or legislative entitlements.
- Failure to update pay rates in line with minimum award changes.
- Payroll system errors or insufficient technology.
- Lack of training and resources for payroll and management staff.
- Inadequate checks on conditions such as overtime, shift allowances, and varied work arrangements.
Penalties for Non-Compliance
The guidance highlights severe penalties for underpayments, including potential criminal liability for deliberate breaches, effective from 1 January 2025. Penalties may include substantial fines, and in cases of intentional underpayment, imprisonment for individuals.
Recommendations for Employers
- Conduct regular payroll audits to identify and correct errors.
- Provide comprehensive training for managers and payroll teams on workplace entitlements.
- Establish a clear process for employees to raise concerns about pay discrepancies.
- Ensure accurate record-keeping in line with the Fair Work Act and Fair Work Regulations 2009.
By adhering to these principles, businesses can foster a culture of compliance, maintain trust with employees, and avoid legal and financial repercussions associated with wage underpayments. Taking a proactive approach will not only protect employees’ rights but also safeguard the organisation’s reputation.