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Why Underpaying Staff Could Get You in Trouble

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Many Australian business owners would be surprised to know that payroll errors and miscalculations can and does lead to severe penalties, especially if these payroll processing issues are not addressed in a timely and appropriate manner. In the case of underpaying staff wages, it can mean huge problems, and not just financially, but publicly too.

So what is underpayment of wages?

This essentially refers to when an employer does not pay the correct monetary amounts for wages, penalties, allowances, penalty rates and anything else that the employee is deemed to be entitled to as part of their wage agreement.

What happens if an employee is underpaid?

An employer can agree to fix the issue and pay the correct amounts owing. If this is not resolved, an employee has the right to make a complaint to the Fair Work Ombudsman. Under the Fair Work Act, employees are given statutory rights to file a claim to recover any underpayment of wages and entitlements that are owed to them. The case will then be provided to a Fair Work Inspector who will investigate the claim and on behalf of the employee, may sue to recover unpaid amounts. In addition, the employee can take their own legal action to recover the amounts owing.

What are the consequences for employers?

The employer may be prosecuted in order for the employees to recover the unpaid amounts. Furthermore, the courts may enforce penalties of up to $6,600 per contravention for each individual and $33,000 for a body corporate. In addition, the courts have the right to publicly denounce business offences such as this which can also lead to bad publicity for the business and for its owners.

Conducting business involves more than just turning up to work and running day to day operations. Business owners are ultimately responsible for the financial accounts, ensuring that the books are in order and for correctly paying wages and entitlements to their employees. Being busy and lacking focus is no excuse for overlooking something as important as your payroll processing system. And if you are making many payroll miscalculations, why not save yourself the trouble and admit that you need the expert help of a payroll outsourcing service?

So if you wish to avoid costly and embarrassing payroll miscalculations such as wage underpayments as well as any possible legal ramifications, contact Australia’s leading payroll services company i3Group now on 1300 725 647. Click here to find out more about how we can help!

10 Feb, 14

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