In October Australians were greeted with news that Woolworths had admitted underpaying thousands of workers up to $300 million with underpayments reportedly stretching back a decade. This is a critical reminder for all organisations to regularly review HR policies and practices.
Around 5,700 staff were thought to be impacted with that figure possibly going higher as an internal review investigates whether other Woolworths brands (e.g. Big W and BWS) could be impacted.
The underpayments reportedly occurred because some team members were being paid annualised salaries but were entitled to be paid either the higher rate of the annual salary, or the rate calculated for actual hours worked under the relevant award.
While it might be no surprise to see small or medium sized enterprises making miscalculations of this nature (given limited, in-house accounting & legal expertise), it seems amazing that a company the size and sophistication of Woolworths could get something like this wrong.
It’s interesting to note some of the other large companies caught out in 2019 underpaying wages, overtime and superannuation. Some household names on the list include the ABC, Qantas, Super Retail Group, Commonwealth Bank, Michael Hill, and Bunnings.
“If a swathe of large, well-resourced companies can fall foul of underpayment claims, smaller businesses, potentially less able to afford costly backpay claims, need to ensure that they effectively manage these risks including at least an annual review.”
The need for this kind of review becomes more crucial given the Fair Work Ombudsman mid-year announcement of a much stronger and vigorous approach to enforcement as part of its 2019-20 priorities. Directors of organisations that underpay workers may also be at risk of personal liability for breaches of the law, including penalties in addition to the payment of any underpaid wages.
The treatment and payment of casual staff is another sometimes vexing issue for organisations. After 12 months employment casuals gain some additional rights. Some recent cases also highlight the need to check whether employees who were initially engaged as casuals, are still truly casuals. Even if they are what are termed long-term casuals, they may be entitled to payment for things like annual leave.
And it’s not just on issues of underpayment where employers need to ensure they regularly review their HR policies and practices.
Australian anti-discrimination laws present a complex mosaic of both state and federal legislation with there being no less than four relevant statutes operating at the federal level to protect people from discrimination and harassment. Many of these laws overlap, have noted exemptions and are varied and amended from time to time.
This makes it essential that managers have an understanding of what is and isn’t likely to land them in hot water when it comes to taking on new staff, awarding promotions and making decisions on operational matters like access to training.
The other issue that commonly presents in these kinds of reviews is misalignment, or contradictory provisions residing in and across contracts of employment, awards, agreements and HR policies and practices.
Despite the best efforts of human resources departments and personnel, these critical documents (especially human resources policies) are often added to and updated over time without periodic review and cross-checking across other important source documents to ensure there is consistency in rights and obligations. Perversely it is often in larger organisations, with more complexity and a greater number and variety of policies, where this problem seems to have the larger likelihood of occurring.
Other matters that can be usefully incorporated into an annual human resource practice review include checking the correct payment of superannuation, workers compensation cover, ensuring that the right documents are provided to new starters upon commencement, the provision of payslips, implementation of single touch payroll and a slew of basic compliance matters that pertain to workplace and health and safety concerns.