Employer fined for underpaying 200 staff

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A national service station operator has been fined for underpaying more than 200 employees – and the mistakes have left the employer $46,200 out of pocket in fines.

The Fair Work Ombudsman (FWO) ordered Freedom Fuels Australia to back pay a total of $191,197 to the 234 employees it underpaid between May, 2006 and July, 2009.

According to the FWO investigation, casual and part-time workers made up the majority of the underpaid workers, and the mistakes were predominantly made in the calculation of overtime rates, namely penalty rates for weekend, shift and public holiday work.

A spate of massive fines and payouts in recent years has led some large organisations to voluntarily conduct pay audits in order to ensure there are compliant. A ‘Pro-Active Compliance Deed’ may be signed with FWO, whereby sample employment records from a random time frame are audited to ensure workers were paid correctly.

In independent internal pay audits, firstly a review of the current industrial instrument that applies to the individual workforce – such as an award enterprise agreement or employment contract – is carried out. Then typically the award classifications are reviewed to ensure the employee is classified at the correct level and receiving the correct pay rate, penalties and allowances, including the transitional items where appropriate.

The Australian Tax Office (ATO) recently flagged superannuation as a high-risk area for pay compliance, and in 2011 alone Australian employers failed to pay more than half a billion dollars in superannuation to employees which they have since been required to back-pay.

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