Wage theft pain rife, with shocking number of employers making payroll mistakes

A shocking number of employers are making payroll errors, leaving their workers unfairly short-changed. Here’s how you can ensure you’re being paid properly.

Aussie workers are being robbed of their full wage entitlements, with startling new research showing three in five employers are making payroll mistakes.

Experts are urging workers to diligently check every pay slip for errors and say those suspicious of being underpaid will most likely be proved correct.

“Employers are guilty until proven innocent,” says Matt Loop, vice president and head of Asia at workplace management platform Rippling.

“Workers should assume their pay isn’t right and scrutinise it heavily to ensure it’s in alignment with their expectations and their employment agreement.

“Paying your employees is a fundamental part of operating a business, but companies are getting it wrong again and again.”

Workers should check every pay slip for errors to ensure they are being paid correctly, experts say.

‘A lot of pain’

Wage theft – which costs Aussie workers nearly $850m a year – is increasing. Exclusive research from Rippling reveals 59 per cent of employers made a payroll error in the last two years.

Most errors involve the underpayment of an employee but delayed payments, a misgrading of workers resulting in incorrect levels of pay, and a failure to pay superannuation are also common mistakes, the research shows.

As companies scale in size, the likelihood of pay errors increases, with mistakes made by more than two-thirds (67 per cent) of businesses who employ 50 or more workers.

Earlier this year, the Commonwealth Bank was fined a record $10.3m for knowingly underpaying thousands of its employees, while Optus and Australia Post have also been forced to pay hefty fines for paying staff incorrectly.

Loop says, for the most part, wage theft is not intentional, but occurs due to a reliance on outdated and non-automated payroll systems, often involving manual input of employee data.

Worryingly, there are fears wage theft will affect even more workers in the future. Loop says proposed industrial relations reforms – aimed at criminalising wage theft – will add further complexity to payroll systems that have already been complicated by the mass shift to remote work arrangements and increased hiring of more geographically dispersed staff, increasing the likelihood of payroll errors.

“It (the incidence of wage theft) is very scary. There’s a lot of pain out there,” he says.

“Employers need to do a better job of elevating (the issue of correct wage payments) as a priority.”

Emma King endured significant stress from being paid incorrectly by a former employer.

No room for error

Emma King recalls the financial struggle she endured when she was paid incorrectly by a previous employer.

“It was very stressful,” the 27-year-old says.

“There were direct debits that were missed and failed payments (as a result of being underpaid).

“I had to keep monitoring my bank account to check it wasn’t overdrawn and I wasn’t being charged overdrawn fees as well.”

Ultimately, the experience led to a lack of trust in her employer and King quit her job.

She’s since found work as an operation manager and client support specialist with Peta Stewart Property Conveyancers, where she enjoys full confidence that she will be paid correctly.

“The main reason people work is to get paid,” King says. “And there should be very little to no room for (pay) errors whatsoever.

“It (wage theft) is quite alarming, especially in the current economic climate and for how advanced (payroll) technology is.

“Being paid correctly isn’t something employees should have to worry about.”

Australian Council of Trades Union president Michele O’Neil says wage theft is devastating for workers already struggling under cost-of-living pressures.

“Wage theft robs working people of money they are rightfully owed and denies them the ability to buy the necessities they need to live,” she says.

“This is real money owed to workers, compounding the impacts of the cost-of-living crisis.

“Even a small amount of wage theft could mean the difference between paying the rent, buying groceries or paying for transport costs to work.”

Stand up for your rights

Any worker who suspects they are being incorrectly paid should document their work hours and check them against their pay slips and employment agreement, says Mary Karolyi, founder of boutique CFO advisory and bookkeeping service The HQ Hub.

If discrepancies exist, workers should report the issue to their employer. But if the problem is not resolved, advice from a legal professional or any applicable union should be sought, she says.

“Wage theft is an unfortunate circumstance no one should have to face,” Karolyi says.

“Remember, in Australia, the Fair Work Ombudsman is a valuable resource in combating wage theft, providing guidance and potentially intervening if necessary.

“As employees, it’s critical to understand your rights and stand against unfair practices.”

Wages lost

The most common payroll errors that Aussie businesses make are:

1. Underpaying or overpaying employees – 48%

2. Delayed payment – 44%

3. Misgrading an employee – 28%

4. Not making superannuation payments – 24%

Source: Rippling