Underpayments of Wages PUNISHABLE BY JAIL

The Queensland Government last week passed legislation making it a criminal offence for employers to knowingly underpay their staff, with Directors and business owners facing jail time if convicted.

This sounds good in theory as no-one should knowingly under pay their staff but the reality is most employers don’t. The majority of underpayment claims are due to human error, payroll errors and the exceedingly confusing and inconsistent pay conditions contained within the modern awards. If the Queensland Government were serious about protecting workers from underpayments, then they should be petitioning for awards and pay conditions to be reviewed and streamlined.

So what are the most common reasons behind underpayments and what steps can employers take to protect themselves and their employees?

Classification Levels It is quite common that employees receive pay increases each year on the basis of the classification level they were first employed at, without their classification levels being reassessed each year. This can include the number of employees they supervise, assuming site supervision responsibility, co-ordinate teams and ensuring the quality of another person’s work. Employers should review their employee’s tasks, responsibilities and classification levels each year to minimise the risks of underpayments due to classification levels. Allowances Are you paying your employees all of the allowances that they are entitled to? Allowances are hard because many of them are not applicable every day or every pay cycle so its easy for employers to miss them when they are. Some of the more common and less common allowances in the Building and Construction General On-site Award are below:

an employee is to be paid an allowance of $17.43 per day for each day worked when the employee starts and finishes work on a construction site an employee who uses their own vehicle to travel between work sites must be paid an allowance at the rate of $0.78 per kilometre.

Employees who are regularly required to compute or estimate quantities of materials in respect of the work performed by other employees must be paid an additional 23.3% of the hourly standard rate per day or part thereof.

Did you know that if an employee’s tools are lost or stolen whilst being transported by the employee at the employer’s direction (ie direction to attend site with appropriate tools to complete the work) then the employer is responsible to reimburse the

employee to a maximum of $1,862 Employers should ensure they are aware of what allowances may apply under their relevant award and ensure these are reviewed each pay period to evaluate whether they are applicable that pay period.

Different Awards A painting business will have the majority of its employees covered by the Building and Construction General On-site Award however they may also have administration staff that are covered by the Clerks Private Sector Award which has different classification levels, allowances and employment conditions.

Employers should review the positions they have employees employed in and ensure they know which Award applies and understand its particular parameters.

Above Award Hourly Rates and Overtime This is by the far, the most common factor resulting in under payments. Many employers believe that if they pay an above award rate then they don’t need to pay overtime penalty rates, allowances or leave loading. This can be true but requires a Better Off Overall Test to be completed to ensure employers are aware of the outer limit.

For example, an employer may pay their level 2 worker $24.60 per hour instead of the award rate of $23.88. At this rate, the employee is better off if no overtime is worked, slightly better off when 2 hours overtime are worked in a week but if 3 hours overtime are worked then the employee is worse off and this would result in an underpayment to the employee.

Reviewing the hours and patterns of work, your employees are working and then completing a Better Off Overall Test as above will assist employers in being confident that they are complying with their obligations and minimising their risk of an underpayments claim.

If you have concerns over please reach out to Vanessa on 0418 190 106 or vanessa@hrmaximised.com.au