The Fair Work Ombudsman’s compliance action in the hospitality industry has triggered claims that a broader rollout of the taxable payments reporting system would reduce the number of businesses unintentionally underpaying their staff.
Last week, the FWO revealed its recovery of $471,904 for 616 workers along the East Coast after auditing businesses in breach of workplace law, including the underpayment of workers.
These were just the latest in a long list of businesses found guilty of, or formally investigated for, wage underpayment.
Celebrity chef Neil Perry and his Rockpool Dining Group attracted substantial media coverage in early July after claims of chronic wage underpayment were aired.
Despite “strenuously refut[ing]” the allegation, the Fair Work Ombudsman confirmed it has launched an investigation into Rockpool.
Fair Work Ombudsman Natalie James has previously criticised the hospitality industry for the prevalence of wage underpayment within its ranks, saying “it is deplorable that nearly one-third of the most serious cases that end up in court involve this one sector”.
However, hospitality is not the only affected sector. Also this month, a series of operators in the beauty sector have been handed various penalties and forced undertakings for wage underpayment.
This included a Sydney beauty salon forced to repay more than $25,000 and undertake to overhaul its compliance procedures after it was found to have underpaid its seven employees; an Adelaide nail salon copped $130,000 in penalties for attempting to cover up wage underpayments; and another Sydney salon accused of underpaying an apprentice working in her first job.
Speaking to My Business’ sister title Accountants Daily, All That Counts director Lielette Calleja said that while the regulation of underpayment and workplace laws was vital, the prevalence of underpayment does not necessarily stem from sinister intent.
Instead, Ms Calleja says her experience working with clients in the industry shows that some employees, especially those on government support schemes, are likely to request to be paid with cash in hand, which makes payments reporting more challenging.
“Not every business owner is intentionally ripping employees off, their hands are forced,” said Ms Calleja.
“Employees are threatening to leave, they say if you are not going to pay us cash, I can't work here because it is going to affect my other payments.
“Employers probably end up paying them a discounted rate and topping it up with cash.”
Instead, to prevent employees from double-dipping, Ms Calleja suggests adopting a system similar to the taxable payments reporting system.
The taxable payments reporting system, first implemented in the building and construction industry, requires businesses to report total payments made to each contractor to the ATO.
Ms Calleja believes that while it will be hard to directly replicate it, because employees do not always have ABNs, more needs to be done to prevent workers from cheating the system.
“I don't have a solution for it but there has to be a system where these people aren’t rorting the system, they are getting cash and they are getting the government allowance,” said Ms Calleja.
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