A new study by global payroll services provider ADP shows that 70% of Australians are working unpaid hours, posing serious risks of underpayment for companies.
A report surveying nearly 2000 Australian employees found that the proportion of unpaid overtime is on the rise, with employees averaging 7.3 unpaid hours of overtime per week. ADP's data indicates that Singaporeans work an average of 9.4 unpaid hours of overtime per week, an increase from the pre-pandemic 7.3 hours. One in ten employees works more than 20 hours of unpaid overtime per week, and over half of employers now closely monitor employees' work hours and attendance.
Kylie Baullo, Vice President of Client Services for APAC at ADP, stated in an interview that companies may face risks to their reputation and business losses if they do not address this issue seriously.
She said, "Firstly, this is about your employees and the contracts you have with them, understanding how work is being done, and ensuring you have the correct contracts. Then, whether it's a small or large company, the key is to establish appropriate systems to collect and record data as much as possible."
The pandemic and lockdowns in parts of Australia have changed the working patterns of many employees, especially those with caregiving responsibilities. It is increasingly common for employees to adjust their work schedules according to their circumstances, which may expose companies to the risk of underpayment.
"With changes in working patterns, it is more important than ever to have simple ways to record time spent on tasks," she said. "I think it's important to be organized and able to assess how much work an employee is doing compared to their pay."
Last year, the Australian Fair Work Commission (FWC) introduced new regulations regarding annual salaries, requiring companies to conduct annual reviews. If employees are paid less than the wages they should receive under their industry award, companies must pay them the difference. The legal amendments also require employers to record employees' annual salary arrangements, including how they are calculated, as well as holiday pay and overtime worked without additional compensation. This significant legal change took effect this year, and with remote work blurring the boundaries between the office and home, the risk of underpayment is ever-present.
The consequences of underpaying employees range from economic penalties to criminal convictions, depending on the state where the employer operates. However, the new annual review process could also pose a risk of owing thousands of dollars to those who have been underpaid.
Baullo states that company leaders can avoid getting embroiled in underpayment scandals by proactively and systematically recording employee data accurately. Some leading employers are using technology to conduct regular reviews and updates of salaries, ensuring that any audits are conducted regularly to avoid paying large fines every 12 months.
ADP's data shows that one in four Australian workers now works more than 11 hours of unpaid overtime per week, an increase of 10% from pre-pandemic levels. The proportion of employees working more than 20 hours of overtime per week has also increased by 2%. Globally, Australians perform slightly better than the global average, with an average of 9.2 hours of unpaid overtime per week.