With the recent July 1 increases to minimum wages and superannuation, employers are frantically ensuring that pay rates are updated and superannuation entitlements are correct.
Whilst you think your work might be done once the increases are in place, a lot of employers forget another important step. Ensuring that their employees are on the correct pay level.
This is the perfect time whilst updating pay rates to include reviews of level classifications. If you are not having regular performance reviews with staff, these increases can be missed and often leave employees working at a higher level in accordance with the award, and not being correctly compensated.
A lot of awards have clauses that stipulate mandatory increases and progression in levels. Check your award to make sure you aren’t required to increase and progress your employees within specific timeframes.
What are the repercussions for not regularly reviewing your staff?
- Disengagement – Staff who are consistently picking up extra work and increasing their skill base without recognition and compensation, will very quickly no longer feel the urge to assist and step up when required. They will not feel valued for the hard work they are putting in and start to wonder “why even bother?”
- Low Morale – If staff feel like they are not progressing in the organisation or have any opportunities for promotion, you will see them leaving in droves for companies that have clear progression plans and career opportunities for employees to strive for. Regular performance reviews and catch ups are the best way to talk to your staff about where they see themselves in the business, and work with them to set goals and timelines on how they can move up to the next level in the organisation.
- Financial – You may have to make significant back-pay payments to employees who have been performing duties at a higher level without correct compensation. Whilst the employee might appreciate a large lump sum, your bank account will not.
- And finally, it’s illegal. Having staff working on a lower level, whilst they are undertaking duties that are to be paid at a higher level, is what is now classified as wage theft.
What is Wage Theft?
The Wage Theft Act 2020 (Vic) comes into operation from 1 July 2021. These laws were passed in the Victorian Parliament in 2020, following several noteworthy corporate underpayment cases.
The Wage Inspectorate Victoria will be responsible for investigating allegations of wage theft and enforcing the new laws.
There will be three wage theft offences:
- Dishonest withholding of employee entitlements;
- Falsifying employee entitlement records; and
- Failure to keep employee entitlement records
The main offence relates to the ‘dishonest withholding of employee entitlements.’ To be prosecuted for this offence, key elements must be proven beyond reasonable doubt. These include the existence of an employment relationship, that the employer withheld an employee entitlement, and the withholding was deliberate and dishonest.
Other related offences include the offence of falsifying employee records and a failure to keep employee records with a view to avoiding wage theft detection.
All offences have a maximum penalty for up to 10 years imprisonment for individuals and fines of up to $1,000,000 for a body corporate.
Only the most severe cases will be prosecuted under these offences. An honest mistake will not amount to wage theft. Similarly, employers who have sought and relied upon professional advice may be able to establish a defence.
If you need help working out which level your staff should be on in line with your award, determining if you are paying them correctly, or want to learn more about implementing a performance review process, please contact Taryn or Ange on 5331 1734 or admin@inspirehq.com.au.
Disclaimer: The material contained in this publication is of a general nature only. It is not, nor is intended to be, legal advice. If you wish to act based on the content of this publication, we recommend that you seek professional advice.
