Amanda Hioe Industrial Coordinator
What do Celebrity chef George Calombaris, 7 Eleven, Caltex, Pizza Hut, Domino’s, and Red Rooster all have in common? They are just some of the prominent Australian businesses that have been entangled in cases of wage theft.
Pay-related problems are pervasive nationwide, affecting both large and small employers, and schools are no exception.
Each year, the IEU recovers about $2 million in underpayment for its members.
Despite the rise of sophisticated software and systems, payroll issues are still quite common. These problems typically stem from administrative or clerical errors and can manifest as:
- overpayments: where an employee receives more than they are entitled to under the relevant contract or applicable industrial instrument (such as an award or enterprise agreement)
- underpayments: where an employee receives less than their entitlements pursuant to a contract or applicable industrial instrument (such as an award or enterprise agreement).
Underpayment
Instances of underpayment often arise from errors such as incorrect classifications, failure to recognise prior service, or inaccuracies in the commencement date leading to miscalculations of leave entitlements.
Identifying these issues can be challenging, requiring a thorough analysis of the employee’s work history and a comprehensive understanding of the relevant industrial instrument. The IEU encourages members to consult with their IEU organiser if they suspect discrepancies in their pay.
The time limit for the recovery of owed funds is six years from the date the money was due.
Overpayment
Overpayments may be the result of human errors such as inaccurate data entry, misapplication of leave, or duplicate payment of allowances.
When employers, or even former employers, discover overpayments, they typically notify the employee and seek to recover the overpaid monies.
As with underpayments, the time limit for the recovery of owed funds is six years from the date the money was due.
In cases where a genuine mistake by the employer results in overpayment, the employer has the right to recover the funds from current or former employees.
Typically, the employer initiates this process by issuing a letter to the employee, detailing the alleged overpayment. If the employee refuses to repay, the employer can pursue legal avenues to recover the funds.
Most enterprise agreements made with the IEU outline specific steps for an employer to follow in the process of recovering overpayments. Generally, the process of recovery will involve the following steps:
- An employer is obliged to investigate the alleged overpayment.
- The employer must notify the employee of the overpayment and provide evidence derived from their investigation.
- The employee then verifies the alleged overpayment (including confirming the amount in question).
- If the employee agrees that there is an overpayment, the employee and employer establish an agreement for the employee to repay the monies owed.
The IEU plays a pivotal role in verifying allegations of overpayments. In some instances, the IEU has found that the reported overpayment did not occur. In other cases, the IEU has identified discrepancies in the alleged amount of overpayment.
Deductions
Where an overpayment has been established, the employer cannot simply deduct the monies from the employee’s pay. The Fair Work Act imposes a strict requirement for the employer to obtain the employee’s authorisation to deduct monies from their wages. Failure to secure such authorisation would constitute a breach of the Act, exposing the employer to significant penalties.
Always check and ask for help
To avoid any of the above, it is always advisable to check your pay and payslips regularly. If you receive a notification from your employer that you have been overpaid, you should always ask for evidence and confirm that the overpayment is correct. As an IEU member, you can get help from your organiser.