What medical businesses need to know about wage theft

There has been a lot of media coverage recently around wage theft. Despite the name, wage theft isn’t always an easy thing to identify and can often be committed unintentionally by employers. There have been many cases over the last couple of years involving big businesses including big corporations that are audited and have payroll controls in place, but were still found to have committed wage theft. In response to these cases, state governments are now introducing legislation and heavy penalties to stress the importance of wage theft. So what does your medical business need to do to prevent falling foul of new legislation?

What is wage theft?

Wage theft is the underpayment of remuneration to employees. This includes the underpayment of ordinary wages, penalty rates or overtime, failing to pay or underpaying superannuation, termination payments or other entitlements such as leave. It can also include unauthorised deductions from an employee’s pay.

The most common reason of underpayment of wages is that employers don’t often fully understand the award system and the award applicable to their business. The interpretation of the awards system and payroll requirements is a complex area.

What is the penalty for committing wage theft?

In Queensland, the criminal code was modified on 14 September 2020 so that wage theft can be prosecuted as stealing, with a maximum penalty of 10 years imprisonment. The maximum penalty can be applied if an employer willfully or deliberately fails to pay an employee.

How to avoid wage theft?

Below are some suggestions which medico employers can implement in order to avoid wage theft:

  1. Use Single Touch Payroll (STP)

Having an accounting system like Xero that includes STP in the program will save time and also reduce the opportunity for human error.

  1. Employee classification and award checks

Incorrect employee classification is one of the most common factors which lead to the underpayment of employees and therefore wage theft. Two common classification errors are:

  • Labelling a part-time employee as a casual; and
  • Designating an employee at a lower level in the award compared to the duties they perform in the business.
  1. Understanding minimum requirements

Once you understand the employee classification, you will also need to understand the minimum requirements for wage rates, overtime, penalty pay and leave loading associated with an employee’s classification under the award.

  1. Be proactive if a mistake is made

If you discover that an employee is being underpaid you should be proactive in fixing that mistake. Below are some steps to follow in order to rectify the mistake.

  • Determine the duration of the underpayment;
  • Determine the amount actually paid;
  • Determine what the entitlement was;
  • Calculate the difference and make a back-payment; and
  • Identify the root cause of the error and implement systems to correct to prevent another occurrence.

How Pilot an help

Pilot can conduct a full wage audit including a review of your payroll system against all relevant awards, pay rates etc to provide advice on any errors or risks, or to confirm your compliance.

Learn more

To arrange a review or to find out more about wage theft and how it may impact your medical business, please contact Kristy Baxter from Pilot’s medical services division on taxmed@pilotpartners.com.au or (07) 3023 1300.