Underpayment of Staff: How Your Club Can Avoid Liability

With recent increases to award minimum rates of pay, an increase to superannuation guarantee obligations, proposed laws to criminalise wage theft and the need to interpret sometimes cryptic terms of modern awards or enterprise agreements, payroll and HR officers must be well-informed and diligent when executing their roles. Even the slightest error, such as a misplaced decimal point, can give rise to the underpayment of an employee.

Over the last few weeks, we have seen multiple news headlines detailing the Fair Work Ombudsman’s (FWO) findings that organisations have failed to pay their employees correctly. The FWO is currently prosecuting franchisor Bakers Delight for failing to prevent its franchisees from underpaying workers an alleged combined total of $1.25 million between July 2017 and October 2020 across three stores in Hobart. The franchisee company, Make Dough Enterprises, allegedly failed to pay its workers the overtime rates listed in a 2012 enterprise agreement and failed to pay workers the minimum rates of the applicable modern award.

What does this mean for clubs?

This prosecution comes as a timely reminder to revise, reconcile and reaffirm that employees are being paid correctly. Within the industry, if your club does not have an enterprise agreement setting out its employees’ minimum terms and conditions, your employees’ entitlements are likely provided for under the Registered and Licensed Clubs Award 2020.

Under the Award, there are a variety of pay provisions and triggers for employees to earn additional benefits such as allowances, overtime or penalty rates. The most common payment errors arise from non-compliance with the Award. Although more often than not, this non-compliance is unintentional, it nonetheless means a club is exposed to underpayment liability and reputational damage. Clubs are reminded of the following principles under the Award which can lead to underpayments if not properly applied:

• the Award includes descriptions for the different classification levels which should be assessed and compared to an employee’s job description to ensure employees are correctly classified
• part-time and casual employees have minimum engagement periods which apply any time an employee is required to attend the club’s premises for a work-related purpose
• if an employee is not given their unpaid meal break after performing five hours of work, they will be entitled to a penalty rate until they take their break
• annual leave loading is payable when a permanent employee takes a period of annual leave and on termination of employment.

To discuss the terms of the Award or your enterprise agreement and the club’s payment obligations, contact our Workplace Relations team on 1300 730 001.