It is hard to pick up a paper without reading about wage theft these days. Which often leaves people and company’s wondering, what really is wage theft and are we part of the problem?

The answer is you probably already are. Wage theft in Australia exceed $10 Billion annually, so let’s have a look at what is happening:

 

“Everyone is out to steal employee’s money!”

Actually, this isn’t the reality. “Wage theft” is more of a continuum, there are undoubtably cases of pure “theft”, such as paying cash in hand, asking for part of wages to be refunded, not paying any overtime, however, most cases are more nuanced. It is more accurate to look at the cause on a scale of intent:

Intentional: Actively trying to avoid payment

Avoident: Finding interpretations that “suit” how you would like to see the world. Ignoring obvious issues if they would increase your wage bill.

Careless: Not actively avoiding, but not pro-actively trying to be compliant

Unintentional: Actively trying to be compliant but having process, interpretation or system failures that cause underpayment (or overpayment but that won’t make the front page of the Herald Sun).

“What is actually going wrong?”

There are 4 key pillars to fair and accurate payment.

Interpretation: What can I / can’t I do, and when should I pay more?  As many retailers / hospitality companies recently realised, converting someone to salary does not create an entitlement to endless overtime. 

Process: What actions must front line managers make to ensure compliance? Where possible this should be automated (see system?)

Attitude: Often the most overlooked area, what effort do both front-line manager and head office place in maintaining systems, interpretation and process?

Systems: Are they correct? As a minimum:

  • Are codes correctly mapped between systems (ie. Avoid underpayment of Super)?
  • What pro-active monitoring exists to identify accidental mistakes from front line manager actions?
  • Automate front-line manager interventions where possible?

“Why is this such a big issue?”

Ignoring the obvious moral issue of deliberately underpaying people, there are a number of other issues:

  • Wage mismanagement can create a large unrecognised liability for the company.
  • By the time you realise you have an issue it can generate very large consulting bills that could be avoided if you are more pro-active.
  • Independent reviews are required on both manual processes and interpretations to ensure you don’t get
  • If issues do occur they can impact heavily on brand sentiment, profit, and board / director remuneration

 

“But does this effect me?”

Can you answer these questions:

  • Do we have faith in how we have interpreted our obligations?
  • How easy do our systems make it for managers to maintain compliance?
  • What active checking do I have in place when managers make mistakes?
  • What do we do culturally if we identify potential issues?

“What can I do to protect my company?”

Like most bad habits, acknowledgement is the first step.  Then’s its time for action, looking for help? Reach out to a company that specialises in Workforce Management (rather than an accounting firm that specialises in billing).

Author: Scott Gavens   LinkedIn Logo

Scott is a Workforce Management Solutions expert having worked on strategies to reduce risk for business, analyse compliance and automate process. At ATEO we have built solution roadmaps for more than a half a million employees in over 5,000 customer sites across 15 countries.

Contact ATEO today to understand how we can help you understand your Workforce and get unbiased advice on how to minimise risk and get the most out of your existing and new tools.

The opinions expressed here are the views of the author/ATEO and do not reflect the view of any current company I’m working for.