James Trainor analyses a recent case in which a payroll manager was held liable for underpayment of wages.
In a recent case a payroll manager was penalised $7,000 for being an accessory to the deliberate underpayment of wages to staff. The penalty has been imposed over deliberate underpayments at two ‘Hanaichi Japanese Fine Food’ outlets in Brisbane.
In addition to the payroll manager, the company operating the business, the directors of that company and another part-owner were penalised a total of $136,000 as a result of legal action by the Fair Work Ombudsman.
The underpayments occurred despite Fair Work inspectors putting the company, directors and payroll manager on notice to pay staff correctly in 2012 after finding employees were being paid unlawfully low, flat rates.
It is significant that the internal payroll manager of the business was penalised for being an accessory to the contravention. While not being primarily responsible for operating the business, the payroll manager was fully aware employees were being deliberately underpaid and helped to facilitate the exploitation of vulnerable workers.
The case is part of a broader push by the Fair Work Ombudsman to test the boundaries of accessorial liability for workplace breaches, with human resources managers also flagged as potential targets. While the Fair Work Ombudsman has previously pursued a payroll company over underpayments, the ruling is the first time a court has fined individual payroll managers as accessories to workplace breaches.
Employers are required to comply with minimum wage rates, record-keeping obligations and issuing of payslips to employees. Separately employers are also required to comply with pay as you go (PAYG) tax withholding and reporting, Superannuation, Payroll Tax and Workers Compensation obligations.
This case highlights for payroll managers the importance of complying with the myriad rules governing staff payroll. Utilising KPMG’s Data Analytics tools to perform an Employment Taxes health check can provide payroll managers with comfort that those rules are being complied with.