The HR/IR Solutions Guide to Managing Underpayment Claims
Recent Findings of Underpayment
Underpayment is handled by the Fair Work Ombudsman and they can investigate your business at any time. Recently, more and more businesses have been found out for underpayment and poor document management. This can result in fines, legal costs and back payment. The best way to avoid it is to get the wages and salary audit completed.
Salary Audits
When you receive a complaint for underpayment from either the Ombudsman or your employees you should:
1. Get wages and salary audit completed.
2. Work out which employees have been underpaid and for how long.
3. Work out what the employee should have been paid for that time.
4. From this number, work out the difference. You will also need to pay interest, tax and superannuation on this sum of money. Interest should be paid at the RBA base rate.
5. Have a meeting with your employee to discuss the underpayment and how they would like to be paid.
6. Notify the Fair Work Ombudsman of what has occurred. You want to do this even if the Ombudsman was never aware of the underpayment because it will demonstrate reliability if you are ever investigated.
7. Update your payment system and documents to ensure that this does not occur again.
What to do now?
Underpayment has become a real issue recently, with many small retail businesses being caught out across multiple cities. The best way to prevent fines and back payment is to have us at HR/IR conduct a thorough wage and salary audit for your business. Contact us today to get started.
