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Employee entitlements, ‘wage theft’ and Fair Work: Why it’s time to be proactive

The Press Club. Tokyo Sushi. Ezard. These three restaurants are just a few of the big names widely reported to be embroiled in the Fair Work Ombudsman’s crackdown on underpayment of staff.

           

 

Its investigations have uncovered serious breaches of Fair Work legislation, affecting businesses across the hospitality, retail and dining sectors as well as many other industries.

In the case of George Colombaris, the celebrity chef has admitted to underpaying his workers by $7.83 million, and has been ordered to pay a $200,000 fine. With heightened media attention and a new focus from employees on whether they are getting a fair deal, it’s likely that many other high-profile names will soon feel the heat from Fair Work. And it’s not just monetary risks that these businesses face. The media has coined the new term “wage theft” — and the reputational damage for anyone accused of this is going to be significant.

We ask the question, why do businesses in these industries, as well as other industries that typically employ large numbers of shift or casual staff outside of the regular nine-to-five, find it so hard to pay their employees correctly, and what can they do to remedy this?

Paying workers fairly: What are the challenges?

Employers often don’t understand their obligations under Australia’s highly complex industry awards systems. For example, the Hospitality Industry (General) Award 2010 allows companies to work out how much an employee would be paid for a 38-hour week. They can then uplift that by 25 per cent to recognise overtime, and pay this amount to the employee on an annual basis, as long as actual pay and total hours worked are reconciled annually, to ensure that the employee has been fully compensated for the time they actually worked.

However, the problem comes because staff in industries such as hospitality work long hours that can change frequently. If a business doesn’t have an effective way of recording hours worked, or never goes back and checks how much overtime a staff member has completed, it is unlikely that it will be paying employees correctly. As such, while employers may take care to roster employees appropriately, employees could end up working 60-plus hours per week and not get paid correctly for this if a reconciliation is never performed by the employer. The media attention given to this issue is prompting staff to check their own wages, and when they find a breach, go to the unions, Fair Work Ombudsman and the press.

The issue is made more challenging because many businesses in these industries don’t have a large or sophisticated HR department or payroll function — this may reduce the capability of the business to correctly review contracts, awards and rates of pay or perform annual reconciliations for those on annualised salaries.

What are the risks to businesses in this area?

There is no doubt that businesses are obliged to pay their employees correctly, fully and appropriately, and should do so in a timely manner. To do anything else is grossly unfair to employees as well as to competitors who are doing the right thing and are disadvantaged as a result.

Fair Work has recognised that there’s an endemic problem with hospitality-related businesses, and is directing its investigations towards these industries. This poses significant risks for any business found to be breaching of their obligations, including:

  1. Reputational damage: “Wage theft” is not a term you want associated with your business, and the risk to business reputation is significant. The business’s ability to attract new customers and high-quality staff in the future will be impacted.
  2. Financial impact: Companies found to be breaching their obligations may have to pay fines as well as compensation to employees, which may grow as the press becomes even more negative. This is in addition to the clear requirement that they make good any historical underpayments to employees. Many hospitality businesses don’t operate on high margins at the best of times, so unexpected employee costs, together with monetary penalties, could have the potential to end operations altogether.
  3. Immigration restrictions: Many employees in the hospitality and retail industries (and many other industries) are in Australia on work visas. Any Fair Work investigation is likely to be referred to the Department of Immigration and Border Force, and vice versa. These bodies will conduct their own investigations into how a company is paying workers from abroad. This may lead to restrictions or bans on employing people from overseas as well as separate fines and additional adverse press coverage for breaching immigration law. Data sharing has become much more efficient among government organisations, meaning the Australian Taxation Office and other government departments may also become interested.
  4. Criminalisation: There has been genuine political interest in criminalising Fair Work Act breaches, and the government has indicated that it is considering drafting further legislation around this. If passed, business owners and directors may face criminal charges and potential prison time if they are found to be underpaying workers.

How can businesses stay compliant with Fair Work?

Firstly, if a business believes it may have underpaid workers or otherwise be in breach of the Fair Work Act, it must deal with the issue quickly and honestly. The owners must work out how much they’ve underpaid their staff and start to remediate. This is essentially their only choice — if Fair Work doesn’t believe the company is trying to remedy the situation, the case is likely to go to court.

Moving forward, the business may need to reshape its workforce or business model. The problem is that many such businesses operate on such low margins that, had they been paying their workers correctly, their viability may be called into question. For companies that have not yet discovered a breach but would like to be more proactive in this area, there are several steps they can take:

Develop a thorough understanding of the awards: There are complicated rules around roster patterns, rates for grades of employees, part-time versus full-time, number of shifts a staff member can work, how many days off they can have, and length of time given between shifts. Support from professionals, including employment lawyers, will likely be a good idea in this regard.

Create policies and procedures around time and attendance records: This is one of the most common errors we see at BDO. In retail there are often very basic paper timesheets, prone to manipulation and error, and without good sign-off and approval protocols. Even if a business has a digital solution, if there aren’t thorough procedures around when an employee says they’ve started their shift (versus when they simply arrive at the  workplace), it’s hard to keep track of who’s working what hours and when.

Offer training: Make sure frontline employees and staff understand these formal policies and procedures to ensure compliance.

Check that annual salaries actually match up to time worked: Another common error we see is that businesses will calculate someone’s annual salary based on estimated hours under an award, but won’t go back and check it correlates with the time an employee has actually worked. This is made even more difficult when shifts are incorrectly recorded or an employer offers alternative arrangements such as time in lieu.

Audit periodically: Regular sample testing and independent checks are a must. This will ensure that employees are following time-recording processes correctly and that payroll teams are checking annual salaries against the hours staff members have actually worked.

 

Ben Renshaw, partner, BDO
27 September 2019
accountantsdaily.com.au

 

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Modern business demands up to date accurate financial information.

We can take care of all your bookkeeping and accounting needs, including the preparation of your annual accounts and periodic management accounts for tax, business appraisal and planning purposes.

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We will discuss your requirements with you and provide you with tailored information and constructive advice on a regular basis.

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Whether you are considering buying or selling a business, we are able to assist you in this transaction by providing experienced advice.

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A good budget is a necessity in a good business plan. It is one of the best business tools we have, allowing us to set financial targets and measure our performance.

In addition to goal setting value, budgets will often improve your chances of acquiring funding. Financers often require budgets as a prerequisite for funding approval.

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Before commencing a new business, the following are some of the key items that need to be considered:

  • Decide on the most suitable structure for your business – sole trader, partnership, trust or company
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Each new business is different and needs to be considered in relation to your individual circumstances and our experience can ensure you are maximising your opportunities.

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Charitable institutions are set up to hold money or assets and carry out activities for the benefit of the community. In Australia, a variety of charitable institutions exist including:

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Every transaction has GST implications. We have experience with these issues and are able to offer expert advice on the implications of GST for your business. The GST related services we offer include:

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We are practiced in acting as a sounding board for management, bringing to the relationship years of experience in business growth and analysis.

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We can provide a comprehensive and confidential payroll service including:

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We can assist in a variety of areas in relation to residential and commercial property including:

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Our Strategic Planning Service is designed to assist our clients to develop financially towards the achievement of their lifetime objectives. Our experience and proven results provide our clients with the security that their financial goals will be met.

Wybenga Financial Pty Ltd is an organisation providing wealth creation and management services to private clients.

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Self-managed superannuation is a flexible means of saving for retirement. It allows you to take control of your superannuation, adopt a customized investment strategy and control fund administration costs.

Superannution law is a delicate area and personalised planning is required for each individual. We have extensive experience in all areas relating to superannuation and can assist in establishing a superannuation fund that will effectively allow you to reach your financial retirement goals.

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We offer a complete range of taxation services and advice based on proven knowledge and experience. Our proactive approach ensures we deliver a consistent service and build solid relationships.

We will work with you to help reduce your tax exposure and provide services including:

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A trust provides a valuable way of protecting the assets you have accumulated for the benefit of yourself and others.  A trust can also be an effective structure for running your business.

We have extensive experience with trusts and are able to offer specialist advice on establishment and compliance, ensuring that all statutory requirements are met.

Wybenga & Partners are able to organise for the preparation and execution of documentation involved in Trust formation.

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Secure File Transfer is a facility that allows the safe and secure exchange of confidential files or documents between you and us.

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Please enjoy the links to these free tools supplied by MoneySmart – a great resource for general financial information. Please get in touch if you would like to discuss any questions that you may have as a result of using these calculators.

Accounting Videos

 

Chris Wybenga

B.Bus, CA

Chris is the Managing Director of the Firm who established the practice in August 1994 and has been responsible for its growth and development since that time.

Chris has over 35-years experience in the Chartered Accountancy profession, predominantly spent in small to medium sized firms, advising both small business and individuals in areas such as taxation and accounting as well as business restructuring and superannuation advice.

Chris is active in the development of young accountants both in mentoring cadets at the Firm and lecturing in taxation for the CA Program for the Institute of Chartered Accountants.

  • 1980 – Commenced employment and part time university studies
  • 1985 – Graduated Bachelor of Business from University of Technology, Sydney
  • 1986 – Admitted as an Associate Member of the Institute of Chartered Accountants Australia
  • 1988 – Registered as a Registered Company Auditor
  • 1994 – Established Wybenga & Partners (formerly known as Farrar & Wybenga)

Dianne Bechara

B.Bus, CA

Dianne is responsible for the day-to-day operations and administration of the practice.

Dianne has over 25-years Chartered Accountancy experience and has significant expertise in providing advice and solutions to high-net-worth individuals and their associated entities. Dianne also has considerable knowledge in the areas of taxation, business services, superannuation, and compliance.

Dianne is active in promoting gender equality in the industry through various programs and mentoring opportunities. Dianne is also committed to the development of young accountants and donates considerable time to sharing her expertise.

  • 1992 – Graduated Bachelor of Business from University of Technology, Sydney
  • 1993 – Commenced employment in acounting profession
  • 1996 – Commenced career with Wybenga & Partners
  • 1997 – Admitted as an Associate Member of the Institute of Chartered Accountants Australia
  • 2002 – Appointed as Director of Wybenga & Partners

Roger Potter

B.Bus, CA

Roger is responsible for the HR aspect of the Firm, cultivating the culture, and maintaining the highly social environment we pride ourselves on.

Roger has over 30-years in the Chartered Accountancy profession and significant expertise in providing advice and solutions to small businesses and high-net-worth individuals. He also has extensive experience in the areas of Self-Managed Superannuation Funds and retirement strategies.

Roger is active in the development of young accountants both in mentoring cadets at the firm and lecturing in taxation for the CA Program for the Institute of Chartered Accountants.

  • 1985 – Commenced employment and part time university studies
  • 1990 – Graduated Bachelor of Business from University of Technology, Sydney
  • 1992 – Admitted as an Associate Member of the Institute of Chartered Accountants Australia
  • 1998 – Commenced career with Wybenga & Partners
  • 2002 – Appointed as Director of Wybenga & Partners

Tess Uncle

B.Sc, M.Com, CA

Tess has over 15-years experience in Chartered Firms and in this time has had a broad range of experience in superannuation, taxation, and business services. In particular, Tess has had significant experience in MYOB and assisting clients in day-to-day bookkeeping activities and periodic reporting.

Tess is responsible for the Firm’s training and development needs.

Tess is active in promoting gender equality in the industry through various programs and mentoring opportunities. Tess is also committed to the development of young accountants and donates considerable time to sharing her expertise.

  • 2001 – Commenced employment with Wybenga & Partners and part-time accountancy studies
  • 2004 – Graduated Masters of Commerce from the University of New South Wales
  • 2005 – Admitted as an Associate Member of the Institute of Chartered Accountants Australia
  • 2007 – Promoted to Manager at Wybenga & Partners
  • 2012 – Appointed as Associate Director
  • 2016 – Appointed as Director of Wybenga & Partners

Adam Roberts

B.Bus, B.Sc, CA

Adam has over 13-years experience in Chartered Firms and in this time has had a broad range of experience in superannuation, taxation, and business services. In particular, Adam has had significant experience in MYOB and assisting clients with periodic management reporting.

Adam is responsible for the implementation of technology in the Firm and sourcing new areas of innovation and efficiency.

Adam is active in the development of young accountants and donates considerable time to sharing his expertise.

  • 2005 – Commenced employment with Wybenga & Partners and part-time Accountancy Studies
  • 2005 – Graduated Bachelor of Science from the University of Western Sydney
  • 2007 – Graduated Bachelor of Business from the University of Western Sydney
  • 2010 – Admitted as an Associate Member of the Institute of Chartered Accountants Australia
  • 2010 – Promoted to Manager at Wybenga & Partners
  • 2012 – Appointed as Associate Director
  • 2016 – Appointed as Director of Wybenga & Partners

Accounting Cadetships

Each year we offer several school leavers or undergraduates the opportunity of beginning their career with us via an Accounting Cadetship. If you are interested in pursuing a career in accounting please read the information below.

What is an Accounting Cadetship?
An Accounting Cadetship enables you to commence your career whilst attaining the necessary university qualifications by studying part-time.

How does it work?
Generally, our cadets complete a Bachelor of Commerce (BCom) or Bachelor of Business (BBus) degree at the University of New South Wales, the University of Technology Sydney, Macquarie University, or the University of Western Sydney.

The firm provides 3 hours paid study leave per week to attend University. This can either be taken at the one time or broken between days depending on the individual’s requirements. In addition, the Firm provides paid study leave for both mid-semester and end-of-year exams.

We take the work life balance very seriously at Wybenga & Partners and our cadets are encouraged to have a fulfilling life outside the office. A typical day will have you arriving at the office at around 8.30am with most days concluding at 5.30pm.

What are the benefits of an Accounting Cadetship with Wybenga & Partners?
Our cadets benefit from the following:

  • Career path – on completion of their degree our cadets have significant practical experience which will assist them in advancing their careers
  • Work helps your studies – by working full-time our cadets are able to apply their practical knowledge in the university subjects
  • Camaraderie with other cadets – the Firm has a number of cadets at various stages of their career
  • Mentoring – cadets are paired with a senior staff member who oversees their progress and training both at work and with their studies
  • Communication and feedback – the Firm has an open door policy which enables all cadets to interact with all members of staff including Directors
  • Culture – the Firm promotes a friendly social culture with a number of functions throughout the year
  • Modern environment – including ‘socialising’ areas such as pool table and break out area
  • Training – ongoing support and technical training. We also provide internal and external training on a monthly basis
  • Remuneration – working full-time provides a market salary and independence with salaries being reviewed every 6-months

What happens when I complete my degree?
The completion of your degree is the first step of what we hope to be a long and successful career with us. The next step is the commencement of your CA Program with the Institute of Chartered Accountants Australia and New Zealand whilst at the same time continuing your employment with us.

A number of cadets have progressed to Seniors, Managers, and Directors within the firm.

Who should apply?
Current Year 12 students or first/second year University Students who:

  • want to commence their career in accountancy;
  • are due to commence or are currently completing a part-time business or commerce degree at university with an accounting major;
  • want to gain valuable hands-on experience while completing their qualifications;
  • are looking for a friendly working environment;
  • are team players who display initiative;
  • have a commitment to self-development;
  • possess excellent personal presentation and communication skills; and
  • are motivated and mature minded.

How do I apply for an Accounting Cadetship?
To apply for a Cadetship position at Wybenga & Partners send us your details. Please also include in your covering letter why you wish to do a cadetship, include relevant qualities you possess, main interests / achievements, and any previous employment.

Interested candidates should initially forward a resume/covering letter of no more than 3-pages. Please provide full details of contact information (telephone or e-mail).

What if I have more questions?
For further information about our Cadetship program, please send your enquiry to info@wybengagroup.com.au

Skilled Accountants

Wybenga & Partners offers a stimulating work environment giving you the opportunity to develop your future success.

Wybenga & Partners recognises and promotes that there is more to life than work. We know that your needs change and we provide support to balance your work, academic and lifestyle pursuits.

We welcome enquires from trained accountants regarding a career with Wybenga & Partners. Please email us your details to info@wybengagroup.com.au