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The shocking truth about wage theft

Do you know what you are being paid?

Composite image of a boss talking to an employee about wages in a rug factory, and money.
'Wage theft' is often the result of a lack of financial literacy. (Source: Getty)

One of the striking issues about the widespread ‘wage theft’ - where employers ‘mistakenly’ under pay their staff, often over many years - is that the employees being ripped off do not know they are being ripped off.

This seems extraordinary.

If you knew your pay should be say $1,250 a week, but you were only getting $ 1,200, it would be reasonable to go to your boss or payroll office and ask them to fix it. And, of course, they will if any such errors are pointed out. Mistakes happen and if they are fixed in good time, that is a good outcome.

Also by the Kouk:


So, why is it that so many companies who have underpaid their staff - either directly or via entitlements and superannuation - haven’t had their staff banging the doors down demanding the shortfalls and errors be fixed?

Clearly, the many hundreds of thousands of workers – if not millions - must not have known what pay, superannuation and the like they are entitled to each month, each quarter and each year.

After all, when was the last time you checked your pay slip to make sure the amount of the gross pay, the income tax and Medicare levy deductions, the payment to your superannuation account and your leave entitlements were all correct?

Financial literacy lacking

I suspect many workers simply do not bother – close enough is good enough.

The issue here is related specifically to financial education and literacy. Various surveys over the years show that many Australians have a poor understanding of their personal finances.

This is not good.

By way of contrast, the amount of time and effort a young person needs to go through to get their driver’s licence is, rightly, huge. Safe driving, don’t speed, and don’t drive with alcohol or drugs in your system are ingrained in the mind of anyone getting their licence. Merge, give way, overtake and drive around a roundabout are a few everyday skills you will need when you are behind the wheel.

It is onerous stuff and, as a result, when the youngsters finally get their licence and hit the roads, they have a good knowledge of what to do.

Contrast that with how much time we spend ensuring the same young person understands money – the amount they get paid? Tax? Superannuation? The Medicare levy? Holiday and sick leave?

Next to none, unless you have a parent or friend willing to drum that sort of information into the young person when they get their first job, debit card, loan and superannuation account.

Workers not at fault

It is little wonder that wage theft is so common, not that it is the worker’s fault, of course.

With enhanced financial knowledge for the general population, perhaps a portion of the recent plague of underpayment of workers would have been caught out by a sharp employee inquiring why their pay was too low, their super was short or their holiday leave balance was wrong.

Of course, some of the problems with pay are well hidden, even from the employers. Where this is the case, businesses and other employees need to be educated about the current remuneration rules and levels of pay and tax when organising the fortnightly or monthly payroll.

What you can do

The key points of all of this boil down to checking your pay slip or equivalent on pay day and making sure the correct amounts are going into your bank account and superannuation fund, and that the income tax and Medicare levy are correct.

If you have any concerns, ask your boss to clarify your pay rates. That way, you can rest easy knowing that you are being paid the correct amount.

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