Keep it simple, stupid

This one is going to be quite uniquely Australian, so apologies in advance if it bores you. If you are reading from a different colony or a Johnny Foreigner location, you might want to persevere simply to assure yourself that, however bad employment regulations are in your country, they’re simplicity itself compared to the Australian version.

Barely a week passes without reports of a new wages underpayment by a large corporate employer. The latest is by the Australian version of GE, Wesfarmers. They’ve discovered and just announced they’ve been underpaying some staff since the early 2000’s and the final bill to put it right is going to be about $15m.

On the face of it, that’s truly scandalous, isn’t it? Particularly coming as it does soon after similar issues with Subway and some fat celebrity chef’s restaurants.

In fact, it takes very little searching to find loads of examples of similar payroll issues across multiple industries and organisations.

This might prompt a question in a curious mind (so nobody employed as a journalist, then); “Are these underpayment issues deliberate or accidental?“.

Speaking from experience as someone who has worked in senior roles in a couple of organisations that have had these issues and being adjacent to the problem (and in one case, responsible for managing the subsequent crisis, despite not having the subject matter expertise…. which was fun), I can categorically state many of these problems are a consequence of incompetence, not mendacity.

The reports of the Wesfarmers problems are instructive; they were discovered following a project to migrate to a new payroll system to achieve compliance to new legislation. Anyone who imagines there’s an individual laughing maniacally after ripping off the workers is clearly deluding themselves.

There’s bound to be a few characters who’ve deliberately chosen to play fast and loose with staff pay but these are most likely to be in smaller companies, probably where they are a significant shareholder. Fat celebrity chefs, perhaps?

In the Wesfarmers’ case, a $15m underpayment over 15 years on a 6,000 person workforce earning about $80k is, what, 0.2%? Small beer.

If we can agree most large organisations are unlikely to choose the utter pain in the arse factor of a future scandal over saving, at most, a couple of percent in staff costs, then we have to question why these otherwise competent organisations keep screwing up payroll?

If you’ve been fortunate enough to avoid looking at the rules around Australian payroll, you might think all that is involved is a simple calculation of hours worked x hourly rate, minus government deductions such as tax.

Ah, such hope….

Here’s one of the Enterprise Agreements presumably causing problems for Wesfarmers. Scan through it and see if you come to the same pair of conclusions as I do:

  1. It’s paid for the private school fees of the children of several lawyers, and
  2. It assumes every manager is an utter idiot or evil.

Most clauses could be replaced with the words, “we will treat each other like grown ups and we won’t be dickheads“. The ridiculous table of days off allowed for bereavement, for example. Speaking as a manager, I’ve never bothered looking at the policy when someone’s relative died, I just told them to take the time they needed. Perhaps that’s naïve but it’s not bitten me so far; an employee hasn’t taken the piss.

Bill’s Opinion

Australia has possibly the most regulated employment environment outside of North Korea. Minimum wages are defined by the government by industry, role and seniority. All of which are pegged to the actual minimum wage so constantly creep up every time the lowest paid Australian gets a raise.

Enterprise agreements are negotiated by union representatives who make Arthur Scargill look like a fan of compromise and administered by an army of “Fair Work Australia” bureaucrats.

It’s a crazy system and one that some poor IT bastard has to code into SAP, Oracle or some other such system only to learn, 15 years later, that a subjective view was taken about what the agreement said on the subject of, say, superannuation payments on overtime when working on a rostered day off after a bank holiday.

Madness.

2 Replies to “Keep it simple, stupid”

  1. It’s almost as though civil (ha!) servants (double ha!) have to keep inventing new regulations to keep themselves in busywork.

  2. Being a shareholder of Wesfarmers I hope it doesn’t adversely impact on me, dont think it will though and yes I dont think its intentional. Some of the smaller firms were stitching up staff with a hangover from the Labor governments work choices but that is not what we have here, more of a superannuation levy on top of allowances error according to the Guardian.

    The whole industrial relations arrangements were looking a bit iffy if labor and Shorten had got in, so we should at least be thankful that they didn’t.

    The EBA itself is just a customized versions of the applicable award, they need to be set out like that so that it addresses the award requirements and also demonstrates that it is more favorable for the employee to adopt the EBA than remain on the applicable ward. Payroll staff are au fait with them and if they are replacing an award then they need to address each of the award terms. So still no excuse for the error here.

    Also you dont have to have a unionized EBA either.

    Anyway back on Wesfarmers, they are still a buy I think.

    Why is the Wesfarmers share price on fire this year?

    Investors have been buying the company’s shares this year thanks to its strong performance in FY 2019 and a couple of big acquisitions.

    In respect to its results, in FY 2019 Wesfarmers reported a 4.3% increase in revenue from continuing operations to $27,920 million and a 13.5% lift in profit after tax excluding significant items to $1,940 million.

    https://au.finance.yahoo.com/news/buy-wesfarmers-shares-dividend-051505561.html

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