Businesses have been warned that simply relying on general advice for paying employees may not be the best course of action, and they should consider using consultancy services from specialised providers, following yet another alleged underpayment case.
The Fair Work Ombudsman is taking action against North State Security, a security company in central Victoria, for allegedly underpaying four former employees nearly $90,000 between 2006 and 2011.
The case is a continuation of the Fair Work Ombudsman crackdown into underpayments and other workplace breaches. The office received another $21.4 million from the federal government in this year’s budget to continue its operations.
North State Security director Ross Geri told SmartCompany this morning he believes there should be “more support for small business” with regard to payment information.
He declined to comment further.
The argument is common among small businesses, many of which feel the government isn’t providing enough support regarding information on wages. This comes alongside the Ombudsman’s own admission that many businesses in underpayment cases don’t realise they’re making a mistake.
The FWO alleges North State Security underpaid four former casual employees, by paying a flat rate that did not meet minimum requirements for overtime rates, shift loadings and penalty rates. It’s also alleged the company didn’t pay the employees’ accrued annual leave on termination.
As a result, the FWO claims the company underpaid the four former employees by a total of $89,117.
Rachel Drew, partner at TressCox Lawyers, tells SmartCompany while businesses would prefer to see more information coming out of the Fair Work Ombudsman, it’s not necessarily the most realistic option.
“There is support available from a number of sources, but sometimes the information is quite general and business owners need to be able to interpret it themselves.”
“They don’t always interpret it correctly.”
Drew says given the Fair Work Ombudsman is primarily concerned with investigation and compliance more than information gathering, there is an onus on business to ensure they’re paying the correct entitlements.
“If that means they need to engage a professional services firm, then they need to do that – but that doesn’t mean they need to pay a lawyer.”
“There are plenty of employee services organisations where, for an annual fee, they will check your awards and make sure you’re paying the correct amount.”
While most small businesses would argue this is the responsibility of Fair Work Australia, Drew points out SMEs rely on external services all the time – accountants being one of the most common. Drew says paying an extra cost to ensure wages are being paid correctly is worth the effort.
“The real problem is that the information given out is just general, and doesn’t necessarily apply to individual businesses,” Drew says.
Acting Fair Work Ombudsman Michael Campbell said in a statement the significant money involved in the case was a key factor in deciding to take legal action.
Both Ross Geri, and company co-manager Sherie Geri, face fines of up to $6,600 per contravention. The company itself faces penalties of up to $33,000 per contravention.