It is no secret that small businesses have had it tough this year.
According to small business ombudsman Kate Carnell, the ‘black summer’ that plagued regional Australia saw 100,000 small businesses negatively affected. Now, with enforced COVID-19 business closures and a likely second wave, we are set to see further pain in the community.
With the odds already stacked against small business owners, the Victorian government’s decision to introduce a state-level ‘wage watchdog’, in addition to the existing Fair Work Ombudsman, is poorly-timed and overlooks the underlying larger issue. In short, Australia’s outdated and overly-complex employment law system is in desperate need of simplification.
Let me be clear: if employers are deliberately underpaying wages, they should face a severe penalty. There is no excuse for calculated wage theft.
The problem with criminalising wage theft at both a state and federal level is that, for many businesses, they do not set out to underpay their staff intentionally.
No one goes into business to become an employer, and there is no universal qualification to become one. This means that many employers try to manage payroll on their own, and end up getting it wrong.
But rather than address the root of the problem, the government has passed a band-aid bill.
Stamping out the stigma
People are the foundation of any business.
When employees are performing at the top of their game, the results are outstanding — but the bedrock of that performance is trust.
When employees know they are being paid correctly, it feeds a healthy company culture founded on reliability and honesty. Compliance is key to building that trust, yet so many Australian employers are missing the mark when it comes to payroll.
Small businesses account for 98% of Australia’s business economy.
While the onus is, and always will be, on business owners to get payroll right, our employment law system is a labyrinth where one wrong turn can lead to a damning dead end.
If big enterprises such as Westpac, Woolworths, Qantas and the ABC can make payroll errors with their leagues of professional human resources and legal teams, how does the government expect small businesses to cope?
Business owners don’t think twice about outsourcing their accounting or tax, but there’s a different stigma associated with payroll. That’s why small business ombudsman Kate Carnell recently called for a government certification of technology that interprets modern award obligations. The aim is to empower SMBs to utilise compliance technology or ‘regtech’ as it’s commonly known.
Carnell’s proposal is a step in the right direction, in providing greater confidence to SMB owners with the knowledge that they are protected by a certified payroll solution. Better yet, it seeks to help small business owners, rather than make the payroll process more confusing.
A different approach
Employers are already afraid of getting payroll wrong. That’s why the majority of underpayments are self-reported.
But rather than influencing business owners to come forward and address their mistakes, Victoria’s state watchdog is promoting cover-ups and non-accountable behaviour. Employers will become reluctant to assign workers to penalty-loaded shifts — which casual staff rely on — and grow their teams.
This is stifling Australia’s economy and fuelling anxiety, fear and resentment amongst employers being categorised into a basket of bad apples.
We need to take a different approach.
The Australian Taxation Office, as an example, promotes self-disclosure if a business recognises they have made a mistake, claiming “we will generally operate on the basis Australians are honest, meaning we will accept the information we are provided with as true and correct and make payments”.
Furthermore, they encourage businesses to seek professional advice from tax experts, similar to how the small business ombudsman is aiming to encourage SMBs to adopt certified compliance technology.
The Fair Work Ombudsman needs to build a culture of trust that sees more employers seek help when it comes to understanding modern awards.
Education over incarceration
Instead of directing resources into a state watchdog, a better use of this time and energy would be putting it towards educating business owners and listening to the advice of industry leaders, such as Kate Carnell, that are striving to simplify the payroll process, not make it more punishable.
I think the government would do well to ask themselves: ‘Is a state watchdog really going to help the wave of wage theft scandals happening across Australia? Or should they instead prioritise education and simplification of an outdated employment law system that sees many businesses fail to get payroll right?’
I’ll leave you with this… Imagine an Australia where more employers are empowered to grow their businesses, and do right by their employees, from a place of hope rather than fear. I wish to see it one day.