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More high-profile companies predicted to admit to wage underpayment

More high-profile companies predicted to admit to wage underpayment

Underpaying staff has been big news in 2019. Will it be more of the same in the new year?

More high-profile companies predicted to admit to wage underpayment

One of Australia’s leading employment lawyers predicts more brands will admit to underpaying workers in the new year in an effort to dodge severe penalties.

A number of high-profile companies found themselves in the headlines this year, either accused of, or fessing up to, wage underpayment. Supermarket giant Woolworths is one of the biggest names to fall foul of wage laws, admitting in October to underpaying close to 6000 staff up to $300 million over a nine-year period.

Andrew Jewell, principal lawyer at employment law firm McDonald Murholme, says while getting on the front foot is good for brand image, there are also huge financial incentives. 

“There’s a potential penalty for each breach of the Fair Work Act,” Jewell explains.

“So, Woolworths owes $300 million to its workers … if you extrapolate that out, we’re talking millions and millions and millions and millions of dollars in potential penalties.

“One of the key things when you assess a penalty is contrition, so [businesses will want] to go before the court and say, ‘As soon as we found it out about it, we found [out] what was owed and we rectified it. Please limit the penalties’.”

The maximum penalty for each individual breach of the Fair Work Act is $54,000, although Jewell believes this could soon change.

“Regulation always lags a little bit, but I think you’re probably going to see some increased penalties come in from a federal level,” he says. “I don’t think it’s going to be so drastic that you can’t run a business, but I think they’ll look at some harsher deterrents.”

Although Jewell admits the situation has likely knocked the confidence of the workforce, he says there is a silver lining. 

“The flip side is people are energised to say, ‘Well, if Woolworths can get it wrong, so can [my employer], so I’m going to … make sure I’m being paid properly’.”

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