Reputation on the line: the importance of getting award compliance right

By Tarsha Gavin, Jelena Durmic
Employment & Safety

In brief 2 min read

With talk of wage theft becoming a criminal offence, this month's Senate approval of a wage and superannuation theft inquiry, and the increasing number of large employers being named and shamed for underpayments, there has never been a more important time for employers to check they are meeting their obligations – including compliance with modern awards.

Key takeaways

  • Award compliance issues can arise in a number of ways, including when employers don't correctly identify the modern award that covers their employees, or when they don't pay the correct rates or entitlements – intentionally or not.
  • New legislation could see employers facing criminal sanctions for underpaying their employees. 

Key compliance concerns

Applying the wrong modern award

Compass Group recently came under fire for looking at the wrong modern award, in the context of seeking to have an enterprise agreement approved.1 Compass was publicly criticised for not having a proper understanding of the work actually performed by its employees. It had applied the Hospitality Industry (General) Award to employees who worked in a hospital environment in roles including catering, cleaning, patient care and administration. However, the Fair Work Commission decided the Health Professional and Support Services Award covered the employees because, although Compass was predominately a food service caterer, it didn't only operate in the hospitality industry and the particular employees in question were in a discrete non-hospitality segment of the business.

Not providing the proper entitlements

Luxottica Retail (trading as Sunglasses Hut) recently entered into an enforceable undertaking with the Fair Work Ombudsman after self-disclosing underpayments arising from a breach of the General Retail Industry Award. Luxottica failed to pay part-time employees overtime penalty rates for hours worked outside of the regular pattern of hours agreed with the employee. Consequently, Luxottica was required to backpay $2.3 million to its employees and also make a contrition payment of $50,000. This is only one of several recent examples of employers not providing correct entitlements to employees.

Wage theft

The Federal Government is drafting legislation to criminalise employee underpayments. In September, it released a discussion paper that proposed legislating against significant wage theft and introducing criminal penalties of up to 10 years' jail for the individuals involved. However, the penalties would not be designed to capture employers who have made genuine and unintentional mistakes leading to underpayments.