It is crucial to understand your requirements and obligations as an employer when it comes to workplace underpayments claims.

In in 2017 the Protecting Vulnerable Workers Act introduced a reverse onus of proof for underpayment claims whereby the evidentiary burden is on the employer to prove that an underpayment did not take place. Therefore it is necessary to maintain adequate records.

In a recent decision in Fair Work Ombudsman v A & K Property Services Pty Ltd & Ors [2019] FCCA 2259, the Court held that the first respondent failed to follow the Fair Work Act regulations subject to s 550(1) of the Fair Work Act 2009 (‘FWA’). The first respondent failed to:

  1. Retain sufficient and adequate records of pay slips
  2. Employee records were not kept
  3. Failure to pay any penalty or overtime payments

S 557C of the FWA states that the employer has the onus of disproving any allegations of underpayments where records are not sufficient.

In the authority of Fair Work Ombudsman v Hasegawa and Ye International Pty Ltd [2019] FCCA 1424, Judge Dowdy stated, at [22]:

The simple fact of the matter is that persons who engage in business activities which necessitate the employment of staff are under a strict obligation to pay their staff the just entitlements of the staff in accordance with law, whether the relevant employer is a major corporation, or … a family business.

… Employees are entitled to respect and part of that respect is to pay them their full entitlements which must be recognised and known to the employer.”

What can you do as an employer to reduce the risk of workplace underpayments?

There are many ways to ensure that you, as an employer are following the FWA regulations.

  1. Staying up to date with any changes to Modern Awards and annual wage increases.
  2. Keeping track of the progression of junior employees or employees gaining extra duties or qualifications.
  3. Keeping good records and implementing yearly audits – this is actually required by law: there are significant penalties under the FW Act for businesses that fail to keep adequate pay records.
  4. Many businesses will find that a lot of these preventative measures are best implemented by hiring a trained HR team or external providers.

If you need assistance with workplace underpayments, please contact JFMLAW on 02 9331 0266.