False economy for bosses not to invest in payroll, says Fair Work Ombudsman

Major underpayments could probably have been avoided had big businesses meaningfully invested in regular auditing

Fair Work Ombudsman Sandra Parker.

Many wage underpayments could probably have been avoided had big businesses meaningfully invested in regular auditing, properly calibrated payroll and record-keeping systems, and supported the teams who use them, departing Fair Work Ombudsman Sandra Parker says.

Ms Parker, who finishes as the FWO on Friday after five years in the role, said reports of burnt-out payroll staff showed more investment by employers was needed.

Ms Parker, who will be succeeded by Anna Booth, said over the course of her tenure, the FWO had to deal with an influx of significant underpayments by large ­employers,

She said the FWO had made the companies pay for extra independent auditing.

“One of the most frustrating things is that many of these underpayments could probably have been avoided had big businesses meaningfully invested in some pretty basic things like regular audit­ing, properly calibrated payroll and record-keeping systems, and supporting the teams who use them,” she said.

“I would say that there have been some positive signs of improvement (but) the fact that we’re now seeing reports of payroll staff feeling burnt out, under-supported and … considering leaving their jobs suggests to me that more investment is needed.

“Companies can’t expect their payroll teams to quickly fix years of accumulated issues on top of all their usual work. In fact, that could just make the issue worse.”

Ms Parker said payroll systems and teams were “not the whole sol­ution if a business does not ensure that its systems and processes reflect the actual practices in the business”.

“Systems are only as good as the information entered into them,” she said.

“Often it is human decision-making and actions around those processes which can have a huge impact on whether a business is compliant or contravening its obligations. The FWO always seeks to understand this when investi­gating underpayments.”

Ms Parker said one of the big problems faced by the FWO was how to assist workers who were too scared to report bad behaviour or seek help because they were worried about the consequences, or did not feel they would be helped.

“It’s an ongoing area of challenge for the FWO that I will leave with my successor. We know that vulnerable workers, particularly migrant workers, will turn to ­people or organisations they trust, such as community legal centres and often journalists, but will be apprehensive about seeking our assistance,” she said

The FWO had never required workers to identify themselves as a visa holder yet migrant workers were overrepresented in its work.

In the five years to June 2022, the FWO filed 126 litigations involving visa holders and secured more than $13.4m in court-­ordered penalties. Since July 2018, the FWO has completed more than 1800 investigations in the horticulture sector.

Growers are using new software that tracks productivity and sets them up to be compliant with the horticulture award but noncompliance is still problematic.

A Victorian farm was recently accused of paying two former employees between $13 and $14 an hour, providing the FWO with falsified pay slips, and making unlawful deductions from one employee’s wages.

Across the fast food, restaurants and cafes sector, which typically employs high numbers of young and migrant workers, FWO recovered more than $13m for more than 4000 underpaid employees in 2021-22.