There are many different reasons as to why a business may be employment non-compliant and/or underpay its employees.
Often an important factor is the industry that a business operates in, which can impact on the systems used or even how complicated the employment obligations can be.
One type of business that we have noticed is receiving an increased amount of media attention around non-compliance issues are those operating in the Healthcare and Social Services industries, including those engaging with the National Disability Insurance Scheme (NDIS) which funds people with disabilities to engage the services of a business to assist them directly, as well as other ‘Not For- Profit’ organisations.
The Fair Work Ombudsmen (FWO) has also noticed these issues within the Healthcare and Social Services sectors, which are amongst the largest employing industries in Australia. The FWO has indicated that it is focusing on the Healthcare and Social Services sectors due to the recent growth created by the NDIS, which has created an influx of new businesses entering the market, many of which don’t have the necessary training to ensure their employment compliance.
In a recent report put together by the Fair Work Ombudsmen, it found that 48% of the NDIS related businesses that had been investigated, were non-compliant. The majority of the non-compliance issues were underpaying employees, however there were also issues found in inadequate record keeping and breaches of other monetary and non-monetary obligations. The most common breaches identified were:
- Minimum hourly rates
- Weekend penalties
- Travel allowances
- Other allowances.
In one case, the Red Cross underpaid its employees by approximately $25 million between 2012 and 2021. The organisation self-reported the issue in 2018 and has now entered into two Enforceable Undertakings with the FWO. Initially, underpayments were found in its ‘Humanitarian Services Division’ then subsequent FWO investigations revealed underpayments in its ‘Lifeblood Division’. These further investigations identified many more underpayments, the causes of them were found to be:
- The incorrect award or enterprise agreement being applied to employees, and
- Employees being incorrectly classified as award free.
More specifically, issues included –
- Incorrect use of overtime,
- Incorrect applications of shift work penalties, and
- Incorrectly allocating annual leave loading and allowances.
For one of the most respected, well-established not-for-profit organisations to make errors like this, it is clear that any business could potentially make significant mistakes in paying employees correctly.
As a result, many businesses desire a form of payroll assurance. However, there hasn’t been a dedicated solution available – before now. Time and Attendance or payroll systems can have trouble dealing with complex awards, whilst payroll auditing only looks at a small scope of what has already happened, not what is currently happening in your payroll.
That is where WageSafe comes in.
WageSafe is an automated payroll compliance solution, that checks your payroll outcomes, virtually live. Through securely connecting to your Payroll, Time and Attendance, and other systems your business uses, WageSafe can provide continuous, real time feedback as to where any underpayments are occurring. Take a look at our case study here.