WAGE THEFT SERIES | PART 3: HOW CAN YOU PREPARE FOR THE NEW WAGE THEFT LAWS?

Now that you’re familiar with the new wage theft laws and the importance of having a strong corporate culture towards payroll compliance, in this Insight we set out our top five tips for ensuring that your organisation is prepared for the changes commencing in January 2025.

1. Ensure that your payroll team and key HR personnel receive up-to-date training

Employment law is ever-changing.  Putting to one side all of the Closing Loopholes amendments that have come into force since December 2023 and continue to be implemented, regular developments also arise from case law and changes to modern awards.

Therefore, investing in training is essential.  If legal developments are missed, this can mean that your wage practices are out of date and non-compliant. 

While we appreciate how busy payroll and HR teams are, prioritising training and continuous improvement will provide a strong example of your organisation’s commitment to wage compliance.

2. Review your governance structure and systems

Given the specific focus on the conduct of boards and managers within the new wage theft laws, it is not appropriate to delegate wage compliance to your payroll/HR team and dismiss this as an operational matter. 

Instead, board members and managers need to be able to demonstrate their proactive commitment to wage compliance in order to be in a strong position to defend any suggestion that they authorised or permitted an offence. 

Organisations should be reporting to their boards on payroll compliance initiatives and reviews, and managers should have clear procedures in place for their teams to escalate pay issues so that they can be properly – and promptly – remediated.

3. Conduct regular payroll reviews

Rather than waiting for a complaint or issue to arise, we recommend regular, proactive   payroll reviews so that employers can be satisfied that their wage practices are compliant. 

This can involve organisation-wide reviews spanning the full six-year liability period for underpayments, or targeted reviews of employees who work in roles which may attract complex overtime and penalty rate provisions, for example.

We note that some awards require periodic pay reconciliations for employees who receive annualised salaries, so this may actually be a legal requirement for certain businesses.

4. Review your pay rules regularly

Pay rules form the basis of your payroll system – if your pay rules are inaccurate or unfit for purpose, it is highly likely that your staff are being underpaid. 

Given the constant changes to awards, employment legislation and case law developments, pay rules require regular review.  A “set and forget” approach will not suffice.

Further, we recommend that pay rules are reviewed externally.  Too often pay rules are left unchanged due to a reliance on past practices (ie. “this is how we’ve always done it”) or perhaps overlooking a development in the law.  A review by a fresh set of eyes will almost always uncover areas for improvement.

5. Have a clear plan in place for dealing with pay enquiries and any approach by the Fair Work Ombudsman (“FWO”)

Many organisations have clear protocols in place for dealing with serious incidents in the workplace or approaches by regulators (eg. in a WHS context). 

Given the seriousness of wage theft allegations and the risk of criminal liability under the new laws, we recommend that a similar protocol is adopted for responding to wage theft claims and enquiries made by the FWO.

Specifically, employers should ensure that they have a clear plan in place in terms of who needs to be notified of a wage theft complaint, who will be their organisation’s spokesperson, when to seek legal advice and how/when to communicate with staff to ensure consistent and clear messaging. 

Understanding the powers of FWO inspectors will also be important to ensure that there is an appropriate balance between assisting their investigation but not readily conceding issues that may require further analysis.

Key Take Aways

With the new wage theft laws commencing in January 2025, now is the time to review your organisation’s approach to wage compliance. 

While employment legislation, awards and enterprise agreements are complex, there are a number of measures that your organisation can start implementing now to ensure that you have a robust payroll function and compliance program in place.  This will put your organisation in a strong position to defend a potential claim of wage theft – and more importantly ensure that your employees are being paid correctly.

If you have any questions about the new laws, your “corporate culture” or the recommendations set out in this Insight, please feel free to contact us.

Cowell Clarke is pleased to offer its RemCheck service to organisations that wish to obtain peace of mind by confirming their payroll compliance.  Our Employment & Workplace Relations Team can also provide advice should you have any queries or concerns.  Contact Cassie Burfoot, Director, or Emily Gray, Senior Associate, for further information.