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Service Excellence Consulting
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Service Excellence ConsultingPty Ltd

Illegal Wage Deduction Dispute

Oz Staff Career Services has taken quite a hit after the Federal Circuit Court found that the company had unlawfully deducted an "administration fee" from 102 workers. Media releases have by and large criticised the company for failing to be aware, amongst other things, of its legal obligations regarding wage deductions.

But from an auditor's perspective, let's take a look at some of the evidence and reasoning tendered by Oz Staff employees in court - have you ever thought this about your practices and procedures?

"Other companies do the exact same thing..."

This is an incredibly common statement made by companies when we identify non-conformances and improper practices.

Companies try to abrogate responsibility for illegal or improper actions by claiming that "this is the way it's done in the industry".

This argument was entirely dismissed by His Honour Justice Burchardt in light of evidence of several past complaints lodged against Oz Staff.

Take Home Message: If everyone else jumps off a cliff, it doesn't mean that you should. And if you've received complaints, indications or suggestions that your practices are illegal or improper, do your due diligence and seek advice. Be proactive and seek the opinion of a trained, independent auditor. Don't wait to be investigated by a government department.

"The old Oz Staff company received legal advice, as well as advice from an accountant and the Fair Work Ombudsman that the deduction was ok."

It is always wise to seek advice about the legality of your decisions. Make sure you keep a record of the advice received, and if it doesn't sound right then get a second opinion. It is ultimately your responsibility to make sure that you are compliant with the law.

Take home message: Fair Work legislation and employee management laws change regularly and it is important to make sure that the advice given to you is current and up-to-date. This could be achieved through regular reviews of company policies and procedures against legislative changes.

"The new bunch of employees may not have been told about the deductions."

Take home message: Regular training and proper staff induction is one of the primary responsibilities of an employer. Staff must always be informed about changes to company policies, procedures and contractual changes.

What's really scary about the Oz Staff case is not that they made illegal deductions for many years, but that so many employers could be in the same situation without realising it, and today they could be risking their business and their reputation.

If you can, bring in experts who are independent and who can review your systems and records for potential problems. It is far better that you take the initiative to identify and resolve issues than allow them to fester into official complaints and legal disputes which could result in hefty penalties and a shattered reputation.