$4 Mil wage-theft fine, and the question all board are not asking. Who should be in charge of Wage-Theft risk?
By Ciaran Strachan, MD and CEO AWCC Ltd
References
FWO secures $4 mil in penalties against restaurant operators https://www.fairwork.gov.au/newsroom/media-releases/2024-media-releases/april-2024/20240410-dtf-world-square-penalty-media-release
Link to recent HR 2.0 podcast where I talk about the future AWCCs plans for the Payroll profession https://www.dhirubhai.net/posts/petetiliakos_hr-payroll-20-payroll-is-coming-to-the-activity-7181274262198996994-dCWr?utm_source=share&utm_medium=member_desktop
For those of you who are unaware, recently the FWO secured a $4 million court-ordered penalty against a former restaurant operator for wage-theft.
This finding in addition to the 2025 wage-theft laws which will introduce criminal penalties is resulting in surge of linkedin blogs for HR and lawyers (most of which are not accredited employment law specialists) as to how to prevent this from happening in your workplace.
However, they are not stating the most important question which Boards and CEO’s should be considering right now, which is.......
,,,,,,,,,,,,,Who should be implementing a wage-theft risk framework?.......
Of which at the end, I pose a question to all Boards and CEO’s as to who is it they want to put in charge of managing their wage-theft risk.
Broad strokes of the above wage-theft case.
- The FWO secured $4 million in court-ordered penalties against a Taiwanese restaurant, including their owners for deliberately and systematically underpaying workers which included false records (known as wage-theft).
- 17 employees were victims of underpayment (Restaurant award……yet again).
- The employees were paid a flat wage, yet false records provided to FWO investigators included appropriate shift penalties and differing rates.
- Some workers were required to work unreasonable additional hours (interesting).
- The HR Co-ordinator who assisted in the underpayments knew from the time she commenced working with the Group that pay slips and records were false and misleading.
- Moneys owed to victims range from roughly $2,000 to $50,000. Which is a lot if you are on one of the lowest awards heavily dependant on overtime penalties which you were not getting anyway.
Who does the Government recognise as capable of managing payroll?
- Under the new ANZSCO reforms, HR Managers (skill level 1 profession) will have removed from their list of skills "Manages personnel undertaking payroll activities" meaning, they are not skilled in managing payroll. Therefore, if HR is to mitigate wage-theft risk via payroll reform, it must ensure it refers this to a Payroll Manager for action and not remediate such risk itself as it is not officially recognised as having sufficient skill in this area at either the line level or Managerial level.
- Under the same ANZSCO updates to take effect at the end of the year, Payroll Manager was created (thanks to AWCC Ltd’s submission). This will impact the country in many ways, from job search engines to organisational structures including capability and risk assessments for wage-theft.
Both of AWCCs submission's on these classification updates can be found here:
ANZSCO (removal of "Manages personnel undertaking payroll activities" from HR Manager) https://awcc.asn.au/awcc-submission-workplace-relations-proposed-changes-may-2023/
ANZSCO (Original submission to create Payroll Manager and Payroll Officer) https://awcc.asn.au/2023-anzsco-payroll-profession-submission-to-government/
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What is the countries only HR Association doing to regulate its members who commit wage-theft?
AHRI has made no statement as to whether this HR Co-ordinator was a member, and if they are a member, whether they are taking any action as per AHRI's code of conduct. It should be noted that AHRI released an article today on this matter which makes no reference to the HR Co-ordinators involvement or fine in relation to the wage-theft.
- If you listened to my recent interview with HR & Payroll 2.0 (link at the top), you would recall my statement that Payroll is separate from HR and other professions.
- Cases like this are one of the key drivers for AWCC’s position that HR should NOT be considered capable of performing Payroll functions, or consider that Payroll is part of the HR profession. This case is a very familiar story, a HR Manager is fined as part of deliberately underpaying staff and AHRI are silent on the issue. Meaning, they are not regulating the profession and the HR Co-ordinator in question is free to get another HR job elsewhere with both future employers and employees being unaware of their previous wage-theft history, which after 2025 will expand from civil fines like those mentioned in this case, to also include criminal convictions.
- So whether you agree with our position or are a fence sitter on the matter of whether HR should do payroll or not, the current fact is that the countries only HR association is not regulating its members for civil and soon criminal involvement in wage-theft, and has not announced any plans to do so.
What trusted professions do to protect the public, they self-regulate!
- This is why AWCC Ltd will introduce a regulated framework which will be structured in a similar way to Lawyers and Accountants which must hold a current COP (Certificate of Practice). This framework will include an internal regulation capability, whereby if a Certified member who holds a COP (Certificate of Practice) is implicated in either a civil or criminal wage-theft case, we will take action and that action will be made public including the full details of disciplinary committee hearing and outcome (suspension or cancellation of certification and membership). This will also include the full publication of the former members details. This follows the example already set by Legal and Accounting professional peak bodies who ensure all the above information is made available to the public.
Why is self-regulation to such a high degree so important?
Our research shows self-regulation benefits a profession in the following ways:
1.?????? Creates a framework to both build public trust and enforce consumer protection. Currently HR is not interested in doing either with regard to wage-theft.
2.?????? Increases demand for the regulated practitioner, in addition to clear recognition of the profession which in turn drives up salaries.
3.?????? Builds a relationship with Government. This is very important as only highly regulated professions are referred to by the courts and FWC for remediation after a deliberate underpayment/Wage-theft. And why payroll and HR are not referred to at all in these outcomes.
4.?????? Ensures we keep the intermediaries out of our profession, ie, HR.
5.?????? Ensures the criminals are kept away from the consumer which in this case, the consumers are both employees and employers.
Just to name a few......
My question to all CEO’s and Boards.
Dear Board and CEO,
With regards to the soon to be implemented wage-theft laws I ask you this, who do you want preparing the risk framework for wage-theft in your organisation?
HR, an unregulated profession who’s only Australian Association has to date not taken any public action against its members who knowingly participate in civil and soon criminal activity with regards to Payroll. Nor has it made any public statement that it plans to do so..
OR
Do you want to place this risk framework in the hands of a profession which the Government considers capable of managing Payroll AND who’s only national association (AWCC Ltd) has commenced work towards self and integrated regulation of the profession, thus stating it will take action against its members who knowingly participate in civil and criminal activity with regard to payroll including wage-theft.
Regards
Ciaran Strachan MD & CEO
Australian Workforce Compliance Council Ltd.
WFM Consultant
7 个月This is where having the correct tools in play with a knowledgeable and experienced payroll manager is key. Knowing the award and applying it is one thing but paying 1000s of shifts every week correctly is where systems such as Rosterspace excels. It then becomes a point of confidence and trust the payroll manager and the organisation can rely on.
Ciarin...they all play dumb re awards and their obligations but have no problem giving me today's balloon payout on the late model German sedan...to the cent!
H R & Business Coach & Non Executive Board Member | FNQ Community Forum Member 2022 - 2023
7 个月Detailed understanding of Award and or EBA provisions that are applicable for organisations is often part of the problem. Bookkeepers and Payroll staff are not necessarily trained in understanding relevant IR documents. Where IR specialists & payroll specialists operate in “silos” problems can easily arise & we see this often in our work. The need for independent review is essential
Single Touch Payroll Lead, Tambla, an SAP Partner
7 个月Exactly, Ciaran! If Directors aren't empowering and investing in their payroll team to maintain a high level of skill in payroll, who else will protect the Directors from adverse findings and penalties? Personal and business penalties ?? Payroll are the first line of defence for accountable Directors. Be proactive!