While it may be hard to believe, another financial year has now come and gone.
With the commencement of the new financial year, employers should take this opportunity to check that their record-keeping, payroll, and employment contracts are (and continue to be) compliant. This is especially important in light of major new changes to the Fair Work Act 2009 (Cth) (Fair Work Act) which have already taken place or are being rolled out (our alerts summarising these changes are here, here and here).
By ensuring that they meet the minimum employment entitlements, employers can avoid the expensive and time-consuming consequences of non-compliance. The Fair Work Ombudsman can monitor, investigate and enforce compliance, including by issuing proceedings seeking financial penalties for contravening the Fair Work Act.
To avoid these risks, employers should turn their minds to three main areas to check their legal compliance:
1. Is your record keeping up to date?
Check that you are continuing to comply with the record keeping requirements under the Fair Work Act. Employers are required to keep accurate records of employee entitlements and information, including in relation to:
- Employment details
- Pay and pay slips
- Overtime hours
- Agreements about averaging of hours
- Leave entitlements
- Superannuation contributions
- Individual flexibility arrangements
- Termination of employment.
With more employees working from home than ever before, some employers have lost sight of the hours their employees are working and when overtime occurs. It is critical to stay on top of record keeping as it is up to the employer to prove they kept the right records or made those records available. Failure to keep records can result in penalties. Particularly in Victoria and Queensland, dishonesty in record keeping is a criminal offence under wage theft legislation.
2. Is your payroll compliant?
Underpayments can easily occur when an employer’s payroll system is not aligned with the relevant industrial instruments, and the employer assumes that what worked in the past will still work today.
It is important for payroll, human resource and management teams to have an intimate understanding of the current terms of the relevant industrial instrument (e.g. modern award, enterprise agreement), including all possible entitlements, how they apply to staff members and how they interact with the way the business operates.
To avoid some common underpayment issues, ask some of the following questions:
- Is the correct industrial instrument being applied to the correct staff members? For example, awards can have overlapping coverage and working out the correct instrument can be complicated. If your business has a “zombie agreement” in place, have you provided the employees with notice of its expiry and what instrument will apply instead?
- Are the employees employed at the correct classification and pay point level? For example, are employees entitled to progress automatically through pay points and is your payroll system managing this adequately?
- Are leave loading, overtime, allowances and penalties being paid correctly? If you employ casuals, is their casual loading being applied correctly to their entitlements? What about superannuation?
If you are unclear about any of the answers to the questions above, you should consider seeking legal advice.
3. Are your employment contracts appropriately worded?
Employers should also be mindful that employment contracts require careful drafting and should support the industrial instrument.
For example, without the right contractual clauses, there may be a risk that the employer is failing to meet the minimum entitlements in each pay period.
Further, many of the new changes to the Fair Work Act will impact employment contracts. Be sure to check that any new employment contracts entered into do not breach any new laws that are currently in effect, such as the laws regarding pay secrecy clauses.
Assistance
The Workplace Relations, Employment and Safety team at Russell Kennedy has extensive experience in assisting clients to work through industrial compliance matters. If you find some discrepancies in your records or payroll, or if you are unsure whether your employment contracts have the right clauses or are up-to-date, please contact Russell Kennedy’s Workplace Relations, Employment and Safety team for legal advice.
If you would like to keep in touch with Alerts and Insights from our expert Workplace Relations, Employment and Safety Team, you can subscribe to our mailing list here.