When you think of HR in 2019, one of the first things that probably comes to mind is the number of payroll scandals. Almost weekly in 2019, we woke up to news of Australian businesses accused of underpaying their staff and not giving their employees what they’re entitled to – with some owing their employees hundreds of millions of dollars.
If you’re like many other business owners and HR managers that get nervous when they see payroll scandals in the news, you’re not alone. The Australian payroll system is a complex system, so it’s no surprise that when employers don’t understand how it works, payroll mistakes occur – and these mistakes are often very costly. Whether the payroll discrepancies are processed intentionally or not, we will never know. But one thing we do know is that to avoid becoming front-page news, you must be 100% compliant.
When you see companies getting caught up in a payroll scandal, it’s an important reminder to check that you’re paying your employees accurately. It’s crucial that you’re giving the correct entitlements, so you minimise the incidence of a payroll error.
With so many different awards, penalties and rates applying to different employees, it can be confusing to know what’s right. However, this is something you cannot afford to get wrong. You do not what to be underpaying your staff and get caught up in a payroll scandal.
So if the thought of payroll makes you squirm, here’s how Employment Hero can help you.
At Employment Hero, we’re built on the philosophy that no one starts a business to become an employer. We want you to focus on what you love doing and leave the complicated things to us. We have a dedicated team of payroll specialists and lawyers who are constantly monitoring awards and updates. This means that you can have peace of mind, knowing that whatever you’re doing in your day-to-day, that you are staying compliant and not following in the footsteps of those caught up in the 2019 payroll scandals.
With 2020 just around the corner, we thought we’d take a walk down payroll scandal lane and share some examples of what not to do. Read on as we share the biggest Australian payroll scandals of 2019.
Ahh, the big Woolworths pay scandal. We all remember this one and I think we can all agree it takes the cake for the most shocking of 2019. A big corporate company with thousands of employees, underpaying their staff? Never!
This pay scandal revealed that Woolworths allegedly owes 5700 employees up to $300 million. These unpaid wages added up over a period of 9 years and affected salaried team members who didn’t receive shift loadings.
Waking up to this news sent shockwaves throughout the entire Australian corporate system. It was a stark reminder for all employers to go through their payroll with a fine-tooth comb and triple-check that they are remaining compliant.
2. MAdE Establishment
The MAdE Establishment pay scandal takes second place for 2019. Owned by celebrity chef, George Calombaris, this payroll scandal involved underpayment of over 500 current and former employees by $7.8 million.
Employees didn’t receive compensation for overtime and penalty rates, and their salaried workers’ pay was applied incorrectly. This resulted in a significant underpayment.
It also led to George Calombaris losing his role on Masterchef. Ouch!
This isn’t the first time Grill’d have ended up in hot water. But here they are, back in the spotlight in 2019.
This issue? Grill’d has placed many of its’ team members on traineeships to reduce wages. The trainee wages means that workers are placed on a reduced amount of pay in order to gain a Certificate lll in Hospitality. It also requires 20% of paid hours to be spent online studying.
The Grill’d trainee wages continued for 3 months after the certification was completed. When surveyed, 92% of Grill’d employees felt that the traineeship was a waste of time as they weren’t getting trained about food safety. It was also found out that the average rate of pay for the company was just $14.16 an hour.
In February 2019, Qantas admitted to underpaying its staff. This underpayment leaves Qantas owing $325,000 to 20 of its licensed aircraft maintenance engineering employees.
Employees who were underpaid received their back payment, interest and a $1000 ex-gratia payment.
5. Super Retail Group
This isn’t the first time Super Retail Group has been in the spotlight for underpaying their staff. In early 2018, it was revealed that the group was underpaying employees from it’s Set Up team. This prompted a wider investigation into the entire group of companies. In 2019, the investigation revealed that retail managers were being significantly underpaid. The Super Retail Group includes Rebel Sport, Super Cheap Auto and BCF.
Super Retail Group set aside $43 million to repay their underpaid staff. This underpayment occurred throughout the entire company and impacted retail managers who had allowances and worked overtime.
6. Rockpool Dining Group
Another pay scandal to rock the hospitality sector was the Rockpool Dining Group. In October 2019, it was revealed that the chain of restaurants by Neil Perry destroyed timesheets in order to cover up underpayments of staff.
The fine-dining group has since made repayments of $1.6 million to those owing. This initial repayment covers just one year of underpayments, with other years of underpayments to follow. Whilst no one knows the full extent to which the underpayments occurred as the timesheets were destroyed, it’s expected that the amount owing will exceed $10 million.
Photo: Neil Perry is an executive at Rockpool Dining Group. (Source: Rockpool Dining Group)
7. Endota Spa
In 2019, the day spa franchise, Endota, was found to be underpaying 13 of its staff by up to $65,000 over a period of 4 years.
Each fortnight, employees working at Endota on 457 working visas had $250 of their pay deducted. This deduction was initially to cover the visa application process, however, it continued for 4 years after the applications were completed. Yikes!
Avoid getting caught up in a pay scandal and get in touch with us today.
The biggest piece of advice you can learn from the 2019 payroll scandals is that it’s crucial to stay compliant. With these scandals regularly in the media, employees are on the ball when it comes to knowing what they’re entitled to. If you want to ensure you’re paying your employees correctly and avoid getting caught up in a pay scandal, get in touch with us today and we’ll show you how. We have a dedicated team of payroll specialists and employment lawyers to ensure you’re staying compliant.
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