Another week with big names in the spotlight for underpayment of wages. we could probably have a regular weekly list. Not small mum and dad businesses that are operating on a shoestring budget, have no bookkeeper and are using cheap or free online accounting and payroll software. No, it’s not these guys that we see in the headlines this week, (although we do acknowledge they also are exposed to risk of wage theft and many are coming before the commission). Who we see in the headlines are huge companies such as IBM, David Jones and Country Road.
Let’s take a look at what’s going on more closely. IBM have self-reported that they have been underpaying staff since 2012, that is 8 years of repetitive errors undetected. The amount that has been determined $12 Million dollars, with a further investigation which could lead to even more. For some light reading, you can read the 28 pages here ‘Enforceable Undertaking’ here
In total 7 Awards were miscalculated pertaining to over 1647 past and current employees. In addition over $7.3 Million dollars of superannuation not paid to workers. Think about all the money that superannuation could have accrued in those years. As part of this undertaking, IBM has to appoint an Independent Expert to oversee the repayment process. Hey IBM! Wouldn’t it have been better to ensure you had experts in payroll before now? Don’t companies of this size regularly audit? Aren’t you guys a global computer company?
Section 29 of this undertaking is instructing IBM to ensure they have practices and processes in place “implemented to ensure ongoing compliance in all respects with the FW Act, the FW Regulations and all applicable modern awards.” As well as three independent audits and an employee hotline. Sounds like a lot of headache and pain? Well it is, and not just for the company, but most importantly for the employees. ( IBM are saying sorry and putting an apology on their website and social media)
Individual back payments range from $1 – $145,000, imagine finding out that you have been underpaid that kind of money? Full Fair Work press release here.
“This matter serves as a warning to all employers that if you don’t prioritise workplace compliance, you risk underpaying staff on a large scale.”
Sandra Parker FWO
So the next two players, David Jones and Country Road both owned by ‘Woolworths’ Holdings Limited ( Sth Africa). Woolworths has been in this situation before to the tune of $300 Million. Read the Financial Review article. This time not as big with 7000 staff members and $3.7 Million dollars of underpayment over 6 years. An audit blamed rostering and payroll system errors and integration of processes. Should we expect a huge multinational company to get this right and check it is right across their whole business. Perhaps it’s too much to expect that companies learn from their mistakes? Spend the money implementing technology to ensure you don’t make the same mistake twice? Just asking…
“All companies need to properly invest in their payroll systems to ensure there is no repeat of the long chain of underpayment announcements we have seen in the last year and a half [and] all workers are entitled to expect their legal minimums are being adhered to.”
Gerard Dwyer, National Secretary of the Shops, Distributive and Allied Employees Union
“We sincerely apologise to all team members impacted by this issue and are working hard to resolve the matter immediately. The cause
of underpayment across the CRG brands was identified as poor systems integration, with the material impact coming from the acquisition of Politix in 2016. We’ve now completed a thorough review of systems and processes and taken the necessary steps across the Group to ensure these errors cannot be repeated.”
Scott Fyfe, Chief Executive Officer, Country Road Group
So is it fair of us to expect companies who have been in this hot water to learn from the pain and make sure it’s the first and last time? Why are large corporations or in fact anyone that employs, people risking their reputation and business? Just like insurance, shouldn’t they do what they can to protect their business and be great employers?
These are interesting questions and with the technology out there right now, Australian made and owned, easy implementation and full compliance with modern awards, why wouldn’t they have ratescalc? It’s a question we are asking ourselves too?
How about you? Is your business protected? Can you afford not to have ratescalc.com?