An initial investigation was undertaken by the Fair Work Ombudsman in 2015, in response to claims by three employees who were concerned about their wage rates. The three employees worked for foreign currency exchange firm UAE Exchange, and were entitled to the minimum wages, penalties and loadings set out in the General Retail Industry Award 2010. It was found that the company had to pay a total of $100,253 in back-pay to the three employees.

According to the FWO the employees were:

• Not paid their minimum wage rate entitlements under the Award.
• Not paid casual loadings.
• Not paid penalty rates for evening, Saturday, Sunday or public holiday work.
• Not paid overtime rates or annual leave loadings (for permanent employees).
• Not engaged for the minimum shift duration.
• Not provided with required payslips.

Full audit

UAE Exchange engaged an external auditor to examine time and wage records for all company employees between 2010 and 2017. Findings from the audit revealed that 240 workers were not receiving their correct entitlements, primarily due to being paid below the legal minimum wage, missing out on loadings, penalties and superannuation, or having wages unlawfully deducted to cover for till discrepancies. The total amount of outstanding wages came to $1,065,391 .

Enforceable undertaking

The Fair Work Ombudsman initiated an enforceable undertaking to resolve the issues exposed in the full audit. The undertaking obligated the employer to:

• Back-pay all outstanding wages and unlawful deductions to each affected employee.
• Adapt workplace policies and procedures to ensure that employees receive the correct pay rates and entitlements, and prohibit wage deductions for till discrepancies.
• Send a formal written apology to all affected current and former employees.
• Provide financial assistance to employees owed over $20,000 for costs associated with seeking financial advice.
• Keep up to date with legislation change via the FWO.
• Provide w orkplace relations training for employees in HR, recruitment and payroll roles.
• Post notices of their unlawful actions and remedial procedures in the workplace and on the company website and Facebook page.
• Conduct future audits with an external provider to ensure compliance.
• Provide $50,000 in donations for community workplace relations education.

Flat rates of pay

The audit discovered that some casual employees were being paid flat rates of between $15.38 and $20.42 per hour. The payment of a flat rate for all hours of work may advantage employers through use of a simpler payroll system. However, in cases where a flat rate is used, the hourly rate would need to be significantly high enough to ensure that employees are better off overall. The employee must also agree to be paid a flat rate to offset normal entitlements. Employers may also consider having individual flexibility agreement to ensure employees understand and agree to the flat rate.

Wage deductions

In addition, illegal wage deductions of $170,018 were taken from employees to cover day-to-day cash till discrepancies. Under the Fair Work Act 2009, wage deductions are unlawful unless authorised in writing by the employee and is principally for the employee’s benefit. An employer cannot deduct amounts from an employee’s wages if the deduction is unreasonable or taken for the benefit of the employer or related party.

Key points for employers to consider:

• The FWO is prosecuting a wider range of businesses in greater numbers for misclassification and underpayment.
• Employers need to be careful when considering flat hourly rates and ensure the rates are high enough to cover award entitlements.
• Consider having an independent audit conducted to assess your exposure.