Don’t get Caught Out by Industry Awards

Who’s been caught out by Industry Awards?

Looking through Fair Work Australia’s recent investigations, we’ve seen several reports of businesses underpaying staff. In a handful of cases, it’s about shonky operators who deliberately try to get around the Award. Far more often, though, we see business owners who genuinely want to do the right thing, but slip up somewhere along the way.

We’ve decided to show a few areas where business owners are running into trouble, so you can check your own HR systems.

What are the consequences?

Although the amount underpaid is often just a dollar or so per employee, over time, that can add up. We’ve seen businesses ordered to find tens of thousands of dollars in back pay. On top of that, you can face fines and a whole raft of enforceable conditions. You can even end up in court, as happened in one recent case.

Casual loadings for childcare operators

A childcare company in Melbourne was ordered to pay $16,369 for underpayments, plus a $19,980 fine. Here, the five underpaid employees were casual workers. The childcare company had made several errors relating to the industry award, including not applying the correct casual loading.

In this case, Fairwork decided to take the company to court for refusing to cooperate with their investigation. The company’s director didn’t hand over documents, or return Fairwork’s phone calls. That failure to cooperate was the reason for the hefty fine.

Fairwork Australia had first got involved because the employees complained to them. However, that’s not always the case, as the next investigation shows.

Correct hourly rates in the retail sector

Fairwork Australia decided to audit a company running Bakers Delight stores in regional NSW. There, they discovered that 26 employees had been short-changed a total of $40,000. Many of the employees were under 21, and the audit showed that several weren’t paid the correct hourly rate. The award errors didn’t end there. Some employees were also not paid for time worked, or not given meal breaks.

Unlike the childcare case, this company fully cooperated with the investigation, so there was no fine. However, the company was required to sign an Enforceable Undertaking. They agreed to change their process to make sure employees were paid the right amount under the award.

Unlawful deductions in the hospitality sector

Even larger operators are not immune to award errors, as a recent example from the Sheraton Hotel in Sydney’s Darling Harbour shows. When Fairwork investigated, they found that 45 out of 65 housekeepers at the hotel were underpaid. There was a string of other award errors, including overstepping the mark by deducting pay as penalties:

• unlawfully deducting money from wages for misplacing name tags
• unlawfully deducting two weeks’ wages if the cleaner didn’t stay in their job for six months.

Fairwork ordered the company to back-pay outstanding wages. Not only that, they had to sign an Enforceable Undertaking. Measures included:

• apologising in writing to all employees
• engaging independent auditors for the next two years
• making a $2,000 donation to the Cleaning Accountability Framework to promote compliance with workplace laws.

How can you make sure this doesn’t happen to you?

Most businesses want to do the right thing by their employees. So, over the next two weeks, we’ll delve into these errors – and show how you can stop them happening in your business.