The Fair Work Ombudsman (FWO) has just released a new Payroll Remediation Program (PRP) Guide to assist employers to identify and correct underpayments of employee wages and entitlements under the Fair Work Act.

The PRP Guide has been designed to encourage greater compliance with the Fair Work Act, outlining the steps that employers can undertake to identify, rectify and ensure correct pay rates and processes are implemented moving forward.

While the PRP Guide is particularly useful for larger businesses with more complex payroll issues, it includes helpful information for smaller employers.  It also serves as a reminder for all employers, of the importance in ensuring that they understand the fair work instruments and Fair Work Act (Cth) 2009 provisions that apply to their employees and the hours they work.

At a high-level, the Guide outlines the following steps that all employers should look to take:

• Identify underpayments – undertake a comprehensive process of discovery and diagnosis to understand where underpayments may be occurring.
• Check the relevant Fair Work Instruments – Understand the relevant provisions under the Fair Work Act and applicable awards.  This will often include steps to:
  • undertake an Award and Classification Role mapping exercise
  • review and audit the current minimum pay rate data against actual rates paid and hours worked; and
  • test and validate data and payroll calculation methods.
• Consult with employees: Engage in open communication with any affected employees to explain the payroll or underpayment issue and proposed remediation steps.
• Fix the problem: Calculate the correct pay rates and entitlements and make prompt and accurate back payments.
• Prevent Future Issues: Implement regular testing and controls to ensure ongoing compliance.

Addressing payroll discrepancies is crucial for maintaining compliance and fostering trust within your workforce. An additional and important point for businesses to note is that when issuing infringements or compliance orders for wage underpayments, the FWO will look more favourably at employers that:

• adopt an appropriate and proactive approach to addressing any underpayments;
• consult with their employees; and
• are transparent and cooperative in addressing the issue.

If you have payroll compliance concerns, or simply want to be on the front foot to ensure your pay rates and award/classification mapping is up to date – ResolveHR can help.

Nick Hedges is the founder of Resolve HR, a Sydney-based HR consultancy specialising in providing workplace advice to managers and business owners. He recently published his first book, “Is Your Team Failing Or Kicking Goals – Take Control of Your People & Their Performance”. It is a practical response to the most pressing HR challenges, which can be found at https://resolvehr.com.au/.

Disclaimer: The contents written do not constitute legal advice and do not cater for individual circumstances.   The information contained herein is not intended to be a substitute for legal advice and should not be relied upon as such.