When Natalie James first started heading the workplace watchdog she believed wage underpayments were a mistake and that most employers wanted to do the right thing.
But by the end of her five-year term as the Fair Work Ombudsman she had come to the conclusion underpayments were not only part of a culture in particular industries but that big businesses and even boards were asleep at the wheel when it came to workplace compliance.
“What really blew me away in my time as FWO is the number of larger, established, profitable businesses getting it wrong,” she said.
“They may have been getting it wrong for a whole range of reasons, but at its heart complacency was behind [it].”
She is now advising those businesses on the potential time bomb they may be ignoring as a partner in advisory with Deloitte.
Her new role follows underpayments attracting significant media attention in recent years as the full scale of the problem becomes apparent in “high risk” sectors such as retail, hospitality, horticulture and cleaning.
Five-star restaurants and well-known corporates and franchises have been caught out over widespread underpayments, causing huge damage to their brand from boycotts or social media.
Ms James says she suspects, from her own experience, that many boards are not asking for data about workplace compliance because they don’t identify it as a high risk.
Large-scale remediation services
“I’d sit across the table from senior people in franchisors who’d say ‘I’m surprised, I don’t know why this has happened’.
“I would think, well, you’ve got a very large proportion of visa workers and young workers in your network, and an unsophisticated set of franchisees, many also from a non-English speaking background – why are you surprised?”
Deloitte has arguably been at the forefront of the issue since 2016 after it was appointed by 7-Eleven to assess what became the country’s first major case of widespread underpayments, totalling more than $100 million of repayments across its franchise network.
The job required the firm to determine claims where 7-Eleven franchisees often lacked proper wage records or engaged in “cash back” scams that saw workers paid correctly but later forced to withdraw money to give back to the employer.
Ms James and the firm are now offering companies similar large-scale remediation services as well as workplace integrity assessments that aim to reveal “below the line” compliance risks, whether or not businesses are obeying the law, as well as “above the line” risks, whether businesses are behaving ethically and appropriately.
Deloitte’s Pay Smart technology also offers to automate payroll and rosters checks to eliminate underpayments at a time when the Fair Work Commission is applying a tough test to ensure every worker on an agreement is better off than the award at all times.
All this is part of Ms James telling business that “you don’t know what you don’t know”.
“If you don’t pick up that rock and have a look underneath it then someone else will and they’ll throw it through your window – and you’ll have to clean up the mess.”