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The recent limelight on wage underpayments has opened questions around the role accountants and bookkeepers play in managing such risks, with one employment expert warning that no industry is immune from the issue.
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‘No industry is immune’: What accountants should know about the underpayment saga
01 August 2019
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As the government moves to criminalise wage theft in the wake of a number of high-profile wage underpayment cases, including the latest example of celebrity chef George Calombaris’ MAdE Establishment group of companies backpaying $7.8 million, BDO partner Ben Renshaw believes more cases are set to get featured as Fair Work continues its crackdown and employees become more self-aware.
“It is an area we are going to see increased activity in. We know that Fair Work has focused on restaurants, fast food and hospitality and there is still a bit to go there,” Mr Renshaw said.
“The retail and construction industries are potentially problematic, and a number of people have suggested the aged care and disability sectors, which tend to have shift-type workers, as having the potential for risk, too.
“It could even extend to government departments and government employees in all honesty, so I don't think any industry is immune to this.”
Increased visibility with Single Touch Payroll
With Single Touch Payroll now in play, Mr Renshaw believes the ATO’s data-sharing program will give the regulators increased visibility over pay discrepancies.
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“In the past, it has been difficult to try and determine whether somebody has been paid incorrectly and it is a slow lumbering process, but now all that pay data is electronic and real-time, so the ATO has it straight away,” Mr Renshaw said.
“From a data perspective, there is now a lot more data sharing going on between the ATO, Fair Work and Border Force, and they are then able to build processes and tools to interrogate that data very efficiently and find discrepancies.
“It doesn’t completely solve the problem, but it is a good step in the right direction.”
What can accountants do?
The Fair Work Ombudsman had previously put accountants and “trusted advisers” on notice over their possible liability under accessorial liability laws, warning that the law covers not only employers who exploit their workers, “but also external advisers who facilitate the underpayment of workers”.
The ATO had also warned that accountants helping clients with STP reporting could potentially be covered under section 550 of the Fair Work Act.
The Institute of Certified Bookkeepers executive chair Matthew Addison believes advisers should probe their clients’ knowledge of the appropriate awards and to be prepared to “walk away” if the business refuses to correct known problems.
Likewise, Mr Renshaw said that while many underpayment issues stem from the in-house functions of a business, accountants can help mitigate risks by asking key questions, particularly during the set-up phase.
He also believes there is a key role for internal audits and periodic checks to ensure businesses are on the right track, and where issues are discovered, remedying the problem immediately.
“This is where an organisation has realised they have made a mistake and maybe it has gone on for quite a few years, then it makes sense to get a combination of legal and accounting and tax advice to determine the extent of their historical error in order to do the necessary remediation in terms of payments, reporting and potentially super as well,” Mr Renshaw said.
“We have a role to play in calling these issues out with clients where we see potential risk, but 99 per cent of the time, it is driven by complexity and lack of understanding on the client’s part and not by anything fraudulent, and we obviously have a role in pointing that out and educating clients.”
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