Why wage and record-keeping compliance matters
There are significant consequences for failure to comply with the Fair Work Act 2009 (Cth)
In addition to the monetary penalties that can be imposed by a court, there are also non-monetary consequences.
The Federal Circuit Court or the Industrial Magistrates Court in Western Australia has the power to make legally binding orders with respect to:
Penalties for not paying an employee correctly
Penalties for failing to retain or produce an employee record
Preventing any further underpayments or record-keeping failures from occuring
Back payments to employees for underpayments
Consequences of non-compliance
Compensation will be awarded by a court if an employee receives less than they were entitled to receive under the FW Act or an industrial instrument. The amount of compensation will be limited to the value of any underpayment.
However pecuniary penalties, which are similar to fines, are also commonly ordered when the court discovers that an underpayment has occurred, or an employer has not complied with its record-keeping obligations.
The maximum value of a pecuniary penalty per contravention is $66,600 for employers, and $13,320 for individuals.
This means that each time an employee is underpaid, or each time a record is not kept that is required to be, a separate pecuniary penalty may be ordered. In some cases, individuals within the business responsible for any decision-making may also be held personally accountable by the court, and be ordered to pay their own pecuniary penalty.
For serious contraventions, where there is a pattern of similar non-compliant behaviour, the court may multiply these penalties by ten. If this occurs, the maximum penalty for employers will be $666,000 and for individuals will be $133,200.
In addition to the financial consequences for wage or record-keeping non-compliance, there are other consequences such as reputational damage and loss of customer and employee goodwill to consider as well. Your business is only as strong as your reputation so ensure you protect it by understanding and complying with your wage and record-keeping obligations towards employees.
