33 Reasons For Australia's Wage Scandal Epidemic

Another week, another pay scandal. George Calombaris’ Made Establishment has been asked to pay back nearly $8 million to hundreds of workers because they had been underpaid over a six year period. 

As part of the penalty, Calombaris must become a “Fair Work Ambassador” educating the restaurant industry on the importance of workplace compliance. While I praise the Ombudsman for using Calombaris’ profile to provide more education, the fact remains that paying correctly under the Australian Modern Award system is incredibly difficult. 

We’ve seen many other large employers like Super Retail Group, Lush, Qantas and ABC get payroll wrong. These businesses have whole departments dedicated to paying their people correctly. When you consider that large employers (>200 employees) only make up 4% of businesses in Australia, how can we reasonably expect the other 96%, who don’t have in-house expertise, to get it right 100% of the time?

The unfortunate reality is that Australia’s Modern Award wage system is so complex that it is inevitable that employers will continue to make mistakes even with the very best of intentions. 

To appreciate why, just consider that in order to pay one employee correctly for one shift an employer needs to understand each of the following 33 factors (and more). They then need to know how to apply them within their particular business context after reading and interpreting hundreds of pages of legalese (aka a Modern Award):

1. Type of employment entity (company, sole trader, partnership)
2. Date of incorporation (if a company)
3. State / Territory of operation
4. Industry type (not as easy as it might seem)
5. Award coverage (often multiple awards are relevant)
6. Operation of any other Industrial Instruments
7. Employment type (casual, part-time, full-time)
8. Employee’s Age
9. Day of the week
10. Day of the year
11. Time of Day
12. Employee’s Education Level
13. Award classification of the specific role/s performed during the shift
14. Specific responsibilities of the role (e.g. opening or closing the business)
15. Number of other employees working during the same shift
16. Specific tasks to be undertaken (e.g. operating a TAB machine, serving alcohol)
17. Specific tools to be used (e.g. using special tools and equipment)
18. Specific work environment (e.g. entering a cool room) 
19. Hours worked per day
20. Hours worked per week
21. Hours worked per month / quarter
22. When or if breaks have been taken during the shift
23. When or if meals were provided during or after a shift or break
24. Location of the worksite (special site allowances)
25. Distance traveled to the workplace
26. Certifications required (e.g. First Aid Certificate)
27. The length of the shift (minimum shift periods)
28. The time the shift started
29. The time the shift ended
30. The time since the last shift ended
31. The regularity of the shifts provided
32. The tenure of the specific employee
33. Any agreed minimum or maximum hours per week

Australia is the only country where paying a basic wage is this bloody difficult.

Many people know my story from employment lawyer to Employment Hero. In short, I have spent over 17 years working to make employment easier to manage and more rewarding, for everyone. The best solution I have developed is Employment Hero, an employment management, payroll and benefits platform that, amongst many other things, automatically interprets the most common Modern Awards in Australia.

It is pleasing to see that Fair Work Australia now recognises the benefits of platforms like Employment Hero. In fact, they have even ordered Made Establishment’s to use such a system (which will be audited by Fair Work). This will definitely help Made Establishments stay compliant but what about the 96% of businesses who don’t have the same resources? What about bookkeepers and accountants who have taken on responsibility for their client’s payroll? 

The answer is automation. Businesses of all sizes need to move away from spreadsheets and manual Modern Award interpretation to reduce payroll risk. Employment Hero already helps over 4,500 Australian businesses to share the cost to make employment and payroll easier for everyone. We are trying to become as affordable and accessible as possible. 

Australia needs an employment system that gives every employer and every employee confidence that they are being paid correctly. Considering the system isn’t getting any easier to comply with, we need technology to provide the solution. But until platforms like Employment Hero are ubiquitous you should expect to see Australia's wage scandal epidemic continue.