A recent Federal Circuit Court decision has seen 48 employees of Macquarie Bank being awarded in total $1.34 Million in underpayment of wages. Ranging from non payment of:
This was even though in the context of the Modern Award the employees were paid well above any wage obligations under the Modern Award due to substantial revenue sharing benefits. However, the Court found that Macquarie Bank could not satisfy their statutory obligations leading to penalties ranging from $2,540 to $44,580 and in total more than $1.34 Million.
How can this be avoided here are 3 tips:
An off-set clause or an all inclusive clause must be carefully drafted and considered in the context of award and statutory obligations as well as non legal obligations such as revenue sharing arrangements, bonus payments, reimbursements and allowances.
A contract without an off-set clause (or a poorly drafted one) will leave an employer open to penalties under the Fair Work Act 2009 even if the employee is remunerated well above any industrial instrument applicable. This Macquarie Bank case is a prime example.
Payroll systems may not necessarily fully reflect the rules within awards which creates risks of unintended underpayments. This is often caused by inaccurate rules or an employer’s misunderstanding of the terms of an award being programmed into the payroll system.
In order to ensure a payroll system reflects the rules prescribed by an award, we recommend employers undertake a manual audit of their employees’ pay. Of course, we recommend speaking to our office first about the possibility of allowing us to undertake an audit given the findings of the audit may be legally privileged (and therefore exempt from disclosure in legal proceedings).
Macquarie Bank had in place revenue sharing benefits schemes developed prior to the Fair Work Act 2009 – however it was not reviewed in the context of the modern award changes. If it had been then a $1.34 Million sum would not have been awarded against Macquarie Bank.
Relying upon – “this is how we always do it” is dangerous. Here are some circumstances where we have seen problems occurring:
If you are an employer and this issue strikes a chord we offer an obligation free consultation – please call +07 3876 5111to arrange an obligation free consultation to discuss your inquiries and we will do our best to provide a practical solution.
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