Last week, as George Calombaris saw his life’s work tumble thanks to payroll errors, Labor industrial relations spokesman Tony Burke wrote: “Wage thieves and their apologists have also sought to blame the complexity of the award system. The system has already been simplified over the past decade. There are 122 modern awards, down from 1500 when John Howard was in office”.
Burke seemed to suggest that awards are short documents, which are user-friendly and easy to interpret. As a former union official, he should know better.
Reducing the number of awards in 2010 did not decrease the complexity and inflexibility of the remaining 122 awards. For example, on the Fair Work Commission website we find the 163 page Manufacturing and Associated Industries and Occupations Award 2010, the 131 page Hospitality Industry (General Award) Award 2010 and the 116 page Social, Community, Home Care and Disability Services Industry Award 2010. Additionally, all 122 awards refer employers and employees back to the Fair Work Act 2009 (Cth), a minefield of complexity all by itself.
Burke also wrote: “The Fair Work Ombudsman (FWO) has a simple online award calculator that tells you the correct hourly rates – and takes about five minutes to complete”. He appears to be is suggesting that finding the correct wage rate is always a simple five-minute exercise. Again, as a former union official, Burke should know this simply isn’t the case. Unfortunately, businesses don’t always know which award they should be using, particularly when the FWO’s calculator gives them the option that multiple awards could apply.
To obtain correct award wage rates, an employer must know the exact industry or occupational award to use and the exact award classification to use. If this does not occur, an employer has almost certainly overpaid or unpaid an employee. When overpayments occur some employers lose money, which they often don’t wish to admit to publically and very rarely recover. However, when non-deliberate underpayments occur, as a result of inevitable mistakes from award complexity, people like Tony Burke shout “Wage thieves!”
The majority of employers, particularly small and medium-sized businesses, are simply not industrial relations experts. While many businesses employ people to advise them or obtain advice externally, they are still reliant on the FWO to provide correct advice. However, the FWO cannot provide legally binding advice about which award to use.
An award simplification process is long overdue and now urgently needed, so the task of correctly paying employees award wages can become as simple as your ABCs. This proactive step towards reforming our IR laws would be far more beneficial than taking the reactive approach of increasing monetary penalties and introducing other sanctions on employers.
Accidental wage underpayments arising from the confusion and complexity of the current system are not in the same category as actual wage theft. The aim should be to create a simple, flexible, productive, fair and competitive IR system which prevents wage underpayments occurring –prevention, after all, is better than cure. If however, employers are still unable to correctly pay employees after the excessive complexity has been removed from our IR system, then there may be no alternative but to increase penalties for non-deliberate wage underpayments.
Sam Puri is an advocate for industrial relations reform.
Got something to add? Join the discussion and comment below.