The Fair Work Ombudsman recently reported that more than half of their 2022-23 underpayment recoveries – $317 million – came from large corporate and university employers. Higher education institutions have been relentlessly in the spotlight for wage underpayment reviews and claims, with a particular emphasis on overtime and casual employee issues.
The introduction of the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 proposes unprecedented changes to reshape the industrial relations landscape and increase enforcement against wage theft. Due in part to their public profile and social leadership role, universities should be especially aware of the need to address such compliance issues and avoid unnecessary disputes.
Compliance expectations of universities
The FWO has previously detailed that it expects universities to:
- report the discovery of significant underpayments or broader compliance concerns;
- where non-compliance issues have been identified, meet the cost of remediation of underpayments and pay interest on both back pay and super;
- assure the FWO that they have correctly identified and calculated underpayments. This requires transparency around the quantification of payments and assumptions surrounding calculation models, outlining how poor record keeping and employment data is being addressed and sharing data and record keeping methodologies;
- equip themselves with the tools required to understand and comply with workplace laws. This includes having contemporary payroll, timekeeping and record keeping systems in place, the implementation of appropriate governance mechanisms and processes, systems and training; and
- commission audits on a regular basis.
Critically, the FWO requires non-compliant institutions to detail how and why issues have occurred, what is being done to correct them and, perhaps most importantly, what systems are in place to prevent them from happening again.
The FWO has indicated its intention to take a benign approach to institutions that come to them in good faith, seek guidance and follow advice. They acknowledged that it doesn’t benefit any affected party to treat employers as if they have committed a crime. The goal is to rectify historical issues, implement means to ensure they don’t happen again in future and move forward.
Common compliance issues in higher education
There are several key compliance issues faced by higher education institutions:
3 out of 10 people employed in universities are casual workers. Agreements might run the risk of violating relevant regulations, for instance, arrangements based on piece rates, and insufficient instructions provided to casual workers regarding compensable tasks like casual marking and tutorial attendance.
The Closing Loopholes Bill 2023 proposes to change the definition of a casual employee and improve rights for casual employees. University employers find themselves once more grappling with the uncertainty surrounding the correct classification of their casual employees. As there are also now various pathways for casual workers to shift to permanent roles, higher education employers must stay on top of their obligations to extend permanent conversion offers to casual employees and consistently assess their rostering to ensure that a casual employee does not maintain a regular work pattern.
Overtime can result in confusion over engaging additional hours as casuals or consultants.
Independence of faculties
Different approaches may be adopted by individual schools or faculties, resulting in additional complexity due to different practices for record-keeping, employee arrangements and/or payment calculations.
Awards and Enterprise Agreements
The industrial landscape for universities involves several intricate modern awards that govern employment conditions. On top of that, there can often be unique enterprise agreements in place, adding another layer of complexity to compliance efforts.
Union and stakeholder involvement
Universities are inherently high profile with very engaged unions and stakeholders including government bodies.
Availability of time and attendance records
Universities are prone to system issues with time and attendance data, and incomplete records of hours worked, particularly for casual part time employees.
Read our article on why workforce compliance breaches occur for other drivers.
Future-proofing compliance for higher education
With such a diverse and complex workforce, there’s no surprise that Universities in Australia are experiencing payroll issues and discrepancies. The current landscape dictates institutions must take a proactive role and prioritise compliance, or risk facing any combination of reputational damage, disputes, and enforcement action.
Emphasis should be placed on investing in contemporary payroll and time and attendance systems to ensure accurate and fulsome record keeping practices, creating a top down led culture of compliance through employee training and engagement, and regular audits.
There is no hiding the fact that compliance is complex, resource intensive and expensive. However, there is a faster, more accurate, and cost-effective solution available.
Automating proactive compliance
Yellow Canary enables large Australian employers to streamline compliance across employee payments, entitlements and Long Service Leave.
Our Always On Compliance (AOC) platform automates monthly reviews, comparing what was paid, to what should have been paid, according to the employee’s modern award, enterprise agreements or industrial instrument.
The AOC platform generates variance and driver reports which enable our clients to rapidly address any issues, avoid protracted remediation projects, and demonstrate to stakeholders and regulators that payroll compliance issues are being addressed.
In a new era of workforce compliance, Yellow Canary is helping employers do right by their employees, whilst avoiding hefty penalties incurred by unintentional underpayments.
* Last updated: 15 September 2023. Yellow Canary content on this website is intended solely for the purpose of offering commentary and general knowledge. The content is not intended to constitute legal advice. You should seek legal or other professional advice before acting or relying on any of the content.