Pay Compliance – Why You Should Act Now

It is evident that wage underpayment scandals are increasingly common, with the biggest and best-resourced businesses in the country falling into the “wage theft” trap.

With any wage underpayment issue there are huge risks for the business; including long-term reputational damage; damage to employee relations; commercial damage to the bottom-line – just to name a few.

This begs an important question: Why should busy directors and executives prioritise pay compliance?  

Directors and executives should want to take a more active role in reducing the chances of wage errors occurring in their company, because acting early is key to reducing costs and, even more importantly, turning pay data into an asset. 

Proactively seeking out and identifying potential wage errors will help reduce the size of the problem, prevent further overpayments, minimise the risk of penalties, and engender trust with regulators, employees, and the public. 

If there is currently a problem with wage errors within the company, it will only continue to increase if the existing control systems continue to be used. 

Very few people are aware that companies tend to overpay their employees just as much as they underpay. Acting early can be self-funding. The ability to reduce systematic overpayments is likely to save the company a substantial amount of money. 

What we have also seen is that being proactive and self reporting if there is an underpayment issue sits better with regulators. The Fair Work Ombudsman has indicated that it will take a tough stance against underpayments regardless of self-disclosure, but doing so can mitigate against the risk of prosecution, or potentially reduce the size of the penalty ordered. 


Being up front with the authorities is only one side of the equation.

In its 2016 global CEO survey, PwC reported that ‘55% of CEOs think that a lack of trust is a threat to their organisation’s growth. But most have done little to increase it.” 

Establishing trust with all stakeholders is the key to success. 

Being proactive builds trust with investors. Investor trust increases for companies that are transparent and embrace social principles, due to many investors seeking a company that has a behaviour focused on sustained and consistent performance. 

Acting early establishes trust within the organisation, which only increases as employers openly address the problem by repaying what is owed and correcting any errors in their pay process. 

By winning the trust of employees, there is less chance of aggrieved parties leaking to the media and causing a public scene further damaging the reputation of the company. 

Most importantly, however,  building trust within the workplace improves employee retention and attraction, increases productivity, reduces turnover, and lays the foundations for a high performing culture. 

For more information contact us here or follow us on LinkedIn

The PaidRight Team