The real consequences of underpaying your staff

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The last thing we want is for you to come unstuck when it comes to your payroll. It’s absolutely vital to your success that you are paying your staff what they are entitled to.

Our business exists almost entirely to support small and medium businesses, whether sole practitioners of a small business or Founders and CEO’s of much larger businesses. We use all of the legal means necessary to ensure that you have the best chance of good profits and long-term success.

We have discussions about payroll and awards individually with our clients all the time, but here is a refresher and some tips to help you make sure you’re complying with the law.

How do I make sure I’m not underpaying my staff?

Outsource your payroll

Even if you are a small business who only employs one or two staff members, it may be worthwhile outsourcing your payroll to a specialist company. We highly recommend this to businesses in hospitality, labour hire or retail. There is no doubt that the award system is complex. Regardless of whether you love it or hate it, it’s here and you must comply with it. We’ve added some links below to companies who specialise in this.

Assess your compliance and obligations

You should be regularly assessing your compliance with workplace laws and awards. Check the age of your staff and ensure that you are paying the right hourly rate for their age. Salaries, wages and payroll are not a set and forget thing, they need to be reviewed, we’d suggest at least once a quarter.

Also, you should ensure that you’re up to date with your superannuation obligations. This area in particular is one where if you get it wrong you will incur significant penalties and charges.

Wage theft is a serious issue, and it is an area where we have seen very serious repercussions in business. It has been the downfall of many outwardly successful businesses. Wage theft can be considered anything from underpayment of hourly rate, unreasonable expectations of overtime to be worked, lower than award rate individual contracts, expecting staff to “donate” the wages of their shift to a charitable cause, putting staff on false traineeships and unpaid internships.

What to do if you notice that you’ve been underpaying a staff member

If you notice that you have underpaid a staff member you need to deal with it immediately. The best way is to notify the staff member and make arrangements to ensure that the situation is rectified as soon as possible. You will need to get advice to ensure that you cover all areas, back pay, tax amounts, superannuation obligations, don’t try to fix it yourself. Be up front with your communication and put things in writing so that you have a record of the situation.

Put simply, compliance with awards is a cost of doing business. If you can’t afford to run a business without complying with these laws and requirements and paying your staff correctly, then you need to look hard at whether it is viable for you to continue the way you are.

To ensure that your staff are paid at the correct rate, check the Fair Work Ombudsman’s pay and conditions tool and see their guide to audit your pay rates. 

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