Employers can follow a “reasonable” interpretation of their wage obligations and still get it wrong.
That statement doesn’t come from an aggrieved entrepreneur or a lobbying group, arguing that employment law is too complex.
It’s from the federal government’s own Voluntary Small Business Wage Compliance Code, which acknowledges employing workers in Australia can be very, very complicated.
The code, signed into effect by Minister for Employment and Workplace Relations Murray Watt, outlines factors the Fair Work Ombudsman (FWO) must consider before referring small businesses for prosecution for intentional wage underpayment.
The code is meant to separate the intentional and egregious wage cheats from well-meaning employers who fail to meet their obligations, and lists the factors that could discourage the FWO from seeking criminal charges after January 1, 2025.
Researching the relevant awards or enterprise agreements, seeking professional advice, and proactively backpaying staff are all factors that could sway the FWO’s decision.
But there are other “relevant matters” for the FWO to consider.
That includes “whether the failure to pay the applicable amount arose because of ambiguity or competing interpretations of obligations in relation to employee pay, and the employer took a reasonable but incorrect interpretation”.
There, a code signed into effect by the current Minister for Employment and Workplace Relations admits employing staff is a tricky matter indeed, and that genuine confusion can contribute to wage underpayment.
That should not be read as a literal ‘get out of jail free’ card for small businesses deliberately stiffing workers of what they are owed.
It is just one part of the FWO’s multi-factor test, and the workplace watchdog is unlikely to dismiss clear patterns of underpayment when an employer feigns confusion over the rules.
And if the heavy civil penalties recently levelled by the FWO are anything to go by, it will not shy away from referring the most flagrant wage cheats for criminal prosecution.
Indeed, FWO Anna Booth said at the outset she is prepared to seek those penalties.
To be clear, wage theft is a scourge on the Australian economy, often depriving the youngest, most vulnerable, and most marginalised people of what they are owed.
Repeated instances of wage underpayment can lower the esteem of entire industry sectors in the eyes of the Australian public, hurting innocent employers who manage to do the right thing.
And previous efforts from the FWO and Fair Work Commission to clarify those instruments have made it easier for employers to understand what is required of them, making it harder for wage cheats to claim total ignorance.
The FWO’s own guidance materials, released in tandem with the code, point employers towards the information they need.
Even so, the code can be read as an acknowledgement of what Australian employers have known for years: employing staff is hard, and smaller businesses, without in-house legal teams and HR departments, can struggle to follow the rules.
You can access the code here, and the FWO’s guidance here.
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Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
