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20 November 2019

Ombudsman calls for better protections of employee wages

The Australian Small Business and Family Enterprise Ombudsman Kate Carnell is calling on the federal government to make it easier for hard-working Australians’ wages and entitlements to be calculated correctly and paid on time.

“We want Australian workers to be paid what they are owed, at the right time,” Ms Carnell says.

“While the vast majority of small businesses fulfil their obligations to their employees, the award system itself is overly complicated and fluid, which can sometimes lead to the employer making honest mistakes.

“Of course employers who deliberately flout the law should be punished, but any new penalties for incorrect payments should take the complexity of the system into account.

“It is critical small businesses be given the chance to rectify payment errors, when it’s clear the mistake was unintentional, rather than being automatically penalised.

“When penalties do apply, they should be proportionate to the nature of the breach. A fine that a large corporation could absorb, could devastate a small business.

“Small businesses are often run by a single person who does everything from management, to IT and payroll.

“That makes it difficult for them stay on top of award changes within the elaborate industrial relations system.

“Recent media stories of very large and high-profile Australian businesses who employ skilled and experienced HR teams, underpaying staff highlights the complexity of the award system.  

“That’s why my office is calling for simplification of numerous industry awards, to help reduce payment errors and administration costs.

“The rollout of single touch payroll provides an opportunity to calculate award wages and entitlements through an algorithm integrated into accounting software such as Xero, MYOB, Quicken and other software systems. This payment algorithm could be owned and updated by the Fair Work Commission to ensure correct wages and entitlements are correct and up-to-date.

“Finally, small and family businesses should not have to carry any additional administrative burden prompted by new proposals, particularly when they act quickly to resolve any errors that have been brought to their attention.”