The Cost Of Underpaying Your Employees

Listen to a Preview

Date: 01/10/2010

Directors and managers beware! You can be fined personally if your business breaches the Fair Work Act.

Enough time has passed since the introduction of the Labor Government's approach to industrial relations, the Fair Work Act, for some evidence to emerge of how it's operating. Sean Millard, of CCI Lawyers, says a key issue has been the negotiation of individual flexibility arrangments under the Modern Award system. The number of employer prosecutions has also increased, partly because the Office of the Fair Work Ombudsman is now better resourced than previously. Directors and managers are increasingly being fined personally when courts find against them, and the fines can be substantial. Underpayment of employees is a common factor in many prosecutions, though the courts will take into consideration whether an underpayment was accidental -- and brief -- or deliberate. It's a more prescriptive regime than previously, and managers are expected to understand how it operates and stick to the rules. The area of workplace rights, covering things like unfair dismissal and performance management, has expanded, and requires careful handling to avoid investigation and possible prosecution. Executives needing information or advice should look to employer organisations or the Fair Work Ombudsman.