You may have recently heard about the 7-Eleven debacle where a store owner was fined more than $400k (the largest penalty to date) for systematically exploiting his workers. He paid his workers as little as only $13 per hour and then falsified records in his payroll system. After being caught, he started to back-pay his employees but secretly arranged for the employees to pay him back $1,000s. Shocking I know.
Now, I am not suggesting any of our HerBusiness members would be capable of such a gross violation of employment law – BUT, I am aware that many SMEs are not paying the minimum wages for employees – this may have occurred because of:
- Outdated or misleading information
- No adjustment of pay rates in terms of the National Wage increase
- They have an Enterprise Agreement that has not been adjusted.
- They don’t think that they can afford it.
The reality is, this is illegal.
There are other ways I see many SMEs putting themselves and their businesses at risk:
- Modern Award compliance – this is where you don’t know what Modern Award your business falls under so you’re not compliant with your obligations. You don’t reference your Modern Award in your employment contracts nor do you have a copy in the office – that equals three breaches – multiplied by the number of your employees!
- Sham Contracting – if you have independent contractors that fail the sham contracting test (which is complex) and they are actually employees – this is another breach – multiplied by the number of independent contractors – plus a requirement to back pay entitlements such as annual leave
- Unfair Dismissals – most SMEs fail the Unfair Dismissal Test (used to be the dismissal Harsh, Unjust or Unreasonable) not because the reason they want to terminate is wrong, but the process they followed wasn’t done properly. This breach means a fine of up to 6 months salary and / or reinstatement – plus time and expense costs.
Now, do I have your attention?
And the reasons that I’m worried for you… there are several:
- Each breach of the Modern Award can attract fines of up to $54k per breach plus there may also be a fine for individuals of up to $10,800 per breach.
- I’m pretty sure there aren’t too many SMEs that could afford fines like these.
- The patience of Fair Work & the ATO is wearing thin – their view is that these laws have been around for 6 years – you’ve had enough time to get it right.
- Ignorance is not an excuse – not now, not ever.
- Don’t lose your business over something that is avoidable – why risk all you have created?
These things can be fixed – yes, this can be a little scary, seem complex and overwhelming – but it is very doable. We have a tool that makes this easier – our Hire to Fire toolkit.
Now that you have got to this point in the article, you will do one of three things – you will:
- Bury your head in the sand and hope that you are not audited or that none of your employees call Fair Work to query a condition of their employment; OR
- Think that I am just ‘scare mongering’ to try and sell some work. (Although yes, I can help! – I have built a solution to this problem that is cost effective); OR
- Take action – get some help – it doesn’t have to be me or Employee Matters but do seek some advice and de-risk your business so you can sleep better at night.
So what are you going to do? Remember – it’s a new financial year which brings new opportunity.
