Underpayments
Employers have an obligation to provide their employees with the benefits that apply to them under industrial legislation and applicable Awards or Enterprise Agreements. Failure to do so may result in an underpayment claim.
Underpayments are not always intentional. They can often occur by accident or due to a lack of understanding of Australia’s complex workplace laws.
Employsure Law is dedicated to helping Employsure clients defend alleged underpayment claims by offering high quality, cost-effective, and practical legal advice and representation.
What is an underpayment?
An underpayment occurs when an employee is not paid at least their minimum legal entitlements under industrial legislation and applicable Awards or Enterprise Agreements. This can include payments such as wages, allowances or penalty rates even other benefits such as paid leave and superannuation.
Employees are entitled to receive various wages, allowances, penalty rates and other entitlements depending on their role or industry, and whether they are a casual, part-time or full-time worker.
Australia’s workplace laws are complex, and it can therefore be difficult to navigate them and keep up to date with all the legal obligations and ensure employees are being paid correctly.
What should SME owners know about underpayments?
By law, employers must ensure they are providing their employees their correct minimum entitlements. The obligation is a strict liability obligation which means even an accidental mistake is no excuse in Australia’s workplace laws.
If an employer is found to have underpaid their employees (even unintentionally) employers will be ordered to pay back their current and/or former employees the amounts owed including interest.
Employers may also incur fines (known as penalties) and legal expenses. Courts can impose fines of up to $63,000 on companies and $12,600 on individuals for each contravention and direct that they be paid to the employee or a union.
In addition to the company receiving a fine, it has now become commonplace for fines to also be imposed on directors of employer companies. Additionally, directors have been ordered to make the underpayment when the company is unlikely to be able to pay because it has been wound up.
It has become easier than ever for employees to report suspected cases of underpayments. The Fair Work Ombudsman offers easy-to-use online tools to help employees determine if they are being underpaid and to lodge anonymous complaints. It also actively targets employers in particular industries.
It is easy for businesses, particularly small business owners, to unintentionally underpay their staff due to Australia’s complex workplace laws. This is because an employer must identify if a modern award or enterprise agreement applies to them, and when it does, they must then identify what is the correct rate of pay and how are the award or enterprise agreement penalties are layered on top of those rates.
Employers who pay above award rates believe they can offset the amount exceeding the Award rate against other Award entitlements which may be owing such as overtime or penalties. This is not the general rule and applies only in limited circumstances.
Who is Employsure Law and how can we help?
Employsure Law is the partner law firm for Australia’s leading workplace relations consultancy company, Employsure. It provides litigation workplace law services to Employsure clients.
Employsure Law understands how the small business sector works and offers business owners high quality, cost-effective, practical legal advice and representation. Business owners can take comfort knowing that they are supported by an expert legal team if they are facing claims or litigation.
In its first year of operation, it was Employment Law Specialist Firm of the Year and its Head of Legal was a finalist for 2019 Workplace Relations Partner of the Year.
The dedicated legal team will support Employsure clients with advice and, if need be, representation in all aspects of claims or litigation.
Benefits of using Employsure Law
Access to a dedicated legal team who will help you through all stages of your claim.
Competitive or fixed fee services for Employsure clients.
A fast, personalised service.
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