Underpayments - Why underpayments will still dominate headlines
13 February 2023
As we look ahead, wage underpayments will once again be front and centre for corporate Australia. Despite the attention over the last few years, why will this continue to be a significant issue?
Firstly, there is the reality of the time it takes for underpayment matters to be investigated and addressed. This involves a complex process of legal interpretation, data collection, recalculation and review that needs time to get right. We will continue to see underpayment investigations reported that have been on foot for many months, if not years. This will keep the issue in focus and serve as a prompt for those yet to embark on their journey of investigation.
Secondly, the Fair Work Ombudsman (FWO) now has a continuing and unwavering focus on underpayments. In 2021-2022, the FWO instigated 137 company litigations, reinforcing how seriously the Ombudsman takes the issue and its willingness to act.
The FWO’s 2021-2022 annual report disclosed that it had recovered $532m in payments, of which $279m related to 267,000 employees of large corporates. This is more than six times the figure of the previous year. As FWO reports, large corporates are coming to grips with the legal landscape, uncovering potential underpayments, rectifying these, and reporting noncompliance to the regulator. This will likely be the case for some time to come, particularly as the FWO continues to highlight industries of focus, such as large corporates and universities.
Add to this, the fact that the October 2022 Federal Budget allocated an additional $75.2m in funding to the Ombudsman. The majority of this funding is to enable FWO to assume the Australian Building Construction Commission’s role in enforcing the Fair Work Act, including underpayments. This may well result in an increase in the incidence of self-reporting from the building sector.
Lastly, we cannot ignore the economic times we face. As the cost of living increases, so will the political and public pressure to ensure workers are paid in full for the work they do and when they do it. If Australian workers struggle with affordability, the pressure to return to them their lawful earnings will be even more of a priority for all.