Brownport Almonds Takes Remedial Actions for Employee Underpayments Exceeding $500,000
- Wage Compliance is a highly specialised legal and industrial field and audits must be performed by experienced employment lawyers – not accountants or HR.
- Accurate Employee Classification Matters: The Brownport Almonds case underscores the importance of correctly classifying employees according to applicable awards to avoid wage underpayments.
- Flat Rates – even of a high value – will often lead to Compliance Issues: Flat rates of pay, especially when employees work overtime or during holidays, can result in inadequate compensation and legal compliance problems. Employees who are paid a flat rate must still be paid at least the entitlement under an award in each pay period unless a properly structured annualised wage arrangement is permitted under their award and implemented by employer and employee in writing.
- Comprehensive Wage Compliance Audits Are Crucial: Conducting regular wage compliance audits, as demonstrated by Brownport Almonds, is essential to uncover and rectify underpayment issues. Audits which are limited to payroll will not identify the full range of issues relating to wage compliance.
- Commitment to Compliance Pays Off: Employers that proactively cooperate with authorities and commit to compliance measures, such as those outlined in the Enforceable Undertaking, can mitigate legal consequences, and protect their reputation.
Brownport Almonds Pty Ltd, a prominent player in the Australian almond growing and processing industry, has undertaken substantial measures to address employee underpayments exceeding $500,000. The company, operating under the Bright Light brand and located in Hattah, Victoria, recently entered an Enforceable Undertaking (EU) with the Fair Work Ombudsman (FWO) to demonstrate its commitment to resolving these issues.
In May 2021, the FWO initiated an inquiry into Brownport Almonds’ adherence to workplace laws, prompted by employee requests for assistance. Following an exhaustive investigation, Fair Work Inspectors unearthed instances of misclassification under the Horticulture Award, leading to wage underpayments.
In response, Brownport Almonds conducted a comprehensive payroll audit spanning from 2016 to 2021. Earlier this year, the company reported to the FWO that 197 of its current and former employees had been underpaid a total sum of $501,511, encompassing superannuation contributions, over the five years.
The underpayment issue had a dual origin. Firstly, the company inaccurately classified its employees under the applicable award, consistently designating them to the level 1 classification despite their job responsibilities warranting higher remuneration. Secondly, the utilisation of flat rates of pay exacerbated the situation. Even when employees worked overtime, shiftwork, or during public holidays, their flat-rate compensation was insufficient to cover their legally mandated minimum entitlements.
These underpayments spanned several facets of compensation, including minimum hourly rates, penalties for afternoon and night shifts, public holidays, overtime, and various allowances. Most affected employees held full-time or casual positions and were engaged in harvesting and production roles, such as tractor and machinery operation and farm-related tasks.
Compensation for individual employees ranged from $4 to almost $12,500, with an average reimbursement of approximately $2,570. Brownport Almonds has already reimbursed the majority of affected employees, current and former, with a commitment to fully rectify all outstanding payments by the end of January 2024. The EU also mandates that the company make interest payments to affected employees at 6.1% per annum.
Additionally, under the conditions of the EU, Brownport Almonds will make a contrition payment of $50,000 to the Commonwealth’s Consolidated Revenue Fund.
Anna Booth, Fair Work Ombudsman, stressed the suitability of the EU, highlighting Brownport Almonds’ readiness to cooperate with the FWO’s investigation and its strong dedication to resolving underpayment issues. Booth emphasised the importance of employers diligently complying with legal obligations, particularly in the agricultural sector, where underclassification can deprive workers of their rightful compensation.
In addition to wage underpayments, Brownport Almonds also failed to maintain accurate records of overtime hours worked by its employees. The EU mandates that the company engage an independent auditor to review the previously disbursed payments to affected employees to ensure the accuracy of underpayment calculations. Furthermore, the company is required to communicate the commencement of the EU to all underpaid employees.
Brownport Almonds’ proactive measures to address underpayments and its commitment to ongoing compliance are significant examples of how companies can tackle labour-related issues while prioritising their legal obligations. Like all industries, the agricultural sector benefits from employers taking the necessary steps to ensure employees receive their rightful compensation and protection under the law.