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Bunnings, 7 Eleven, Woolworths, Coles and now Target, the issue of underpayment of staff isn’t going away. It seems each week there is an announcement of another big business admitting to underpayment of wages, overtime or superannuation. There is no denying our wage system is complex. If you’ve tried to pick up an award and interpret it, you’ll understand just how complex it can be.
So if big business like Bunnings, Coles, and Woolworths can’t get the calculations right with their inhouse expert Human Resource and Payroll teams what hope does small business have. Small businesses often don’t have a HR Manager or a Payroll person, these roles are combined with other responsibilities and often sit with the business owner, the Office Manager, the Accountant, the Production Manager or whoever it might be that is lucky enough to be handballed the people management.
At a local level, our team at Inspire HQ are often working with small business clients to resolve underpayment of staff issues. I can’t comment for big business but in the majority of cases the small businesses we work with to fix these issues are horrified that they have underpaid staff and they are committed to fixing the issue. They know a complex wage system and the lack of being able to get clear advice are no excuse. If you have ever tried to call Fairwork you’ll know how wishy washy the advice can be and then call back an hour later (if you can even get through that quickly) and you’ll get a different call taker and different advice on exactly the same matter. It’s no excuse but it’s not an easy space to navigate.
I am seeing a shift in thinking from business owners when it comes to people management and employment terms and conditions. We would never run our business without the advice of an Accountant to help us with our finance and accounting compliance, tax and financial performance. We happily engage the services of our Lawyer to set up our business structure to protect us, set out our terms of business and make sure we are meeting our legal obligations. Yet everyday businesses make offers of employment to people without providing an employment contract, without checking award rates or doing a BOOT (Better Off Overall Test) to make sure they are not underpaying staff. Now businesses are starting to realise that they can’t just wing this employment stuff.
If you are a small business what should you be doing to keep yourself out of hot water when it comes to the underpayment of staff?
- Surround yourself with the right experts to help guide you and provide the advice you need. Just like you have an Accountant and a Lawyer, you need HR support (talk to us at Inspire HQ about how we can help). It’s impossible to wear all the hats in small business so instead of trying to do it all, get the right support network around you.
- Undertake regular payroll audits. Employers fall into the trap of thinking they don’t need to do this if their staff are on salaries. Looking at how salaries compare to award rates, at least annually is critical. You need to factor in overtime, allowances, penalties etc to your calculations. This is what’s known as a BOOT.
- Ensure you have clear and current Position Descriptions and Employment Contracts. Position Descriptions detail the role requirements and will be key in aligning the position to a Level in the appropriate award. Employment Contracts need to detail the terms and conditions including things like is it a salary or an hourly rate, how will over time be paid, is the salary all inclusive. Downloading an employment contract template from google isn’t as straightforward as it seems. Investing in getting the contract right will save you money in the long term.
- Develop a checklist (cheat sheet/instructions/guidelines or whatever you want to call it) for your payroll person. This checklist should include info on the intricacies of your business. Detail how overtime is calculated, when super is payable, when allowances need to be paid, what the ordinary spread of hours is etc. Don’t assume your payroll person or your payroll system is doing all this correctly. With a cheat sheet you should be able to quickly audit your own payroll to make sure what you think is happening is actually happening.
The reality is our wage system is complex but we can’t stick our head in the sand. Getting the right advice from the start, investing in the right frameworks, templates and building the right processes will make sure you don’t end up in the hot water alongside the likes of Bunnings, Coles and Woolworths just to name a few.
Angela Connor is the Founder and Director of Inspire HQ, one of regional Victoria’s leading recruitment, human resource and career coaching companies. She understands the significance of having the right team of people in a business and is passionate about helping business to attract, recruit and engage the right people so those people can inject their talents into the business; creating an environment where they can do great work and love what they do. Find more useful information and advice at www.inspirehq.com.au or by following Angela on LinkedIn.