Resources: Blog

Why businesses should have compliant employment and payroll processes


System Alert

Recenty, MAdE Establishment Group (the Group) and its celebrity chef director and founder went public with a mea culpa that it underpaid the wages of at least 162 employees across its Melbourne restaurants.

Recenty, MAdE Establishment Group (the Group) and its celebrity chef director and founder went public with a mea culpa that it underpaid the wages of at least 162 employees across its Melbourne restaurants.

The Group issued the public apology to employees for the underpayments which relate to the calculation of overtime rates and the incorrect classification of employees under the Modern Award for the past six years. The employees have since been repaid up to a total of $2.6 million.

In 2015, the Fair Work Ombudsman (FWO) alerted the Group of its concerns with the payment of wages to employees but no action was taken at that time. The Group has since agreed that it will work collaboratively with the FWO.

The full extent of the underpayments and process failures were not discovered until a Chief Executive Officer was appointed to the Group in October 2016. An internal review was ordered which identified issues in the payroll processes resulting in the incorrect classification of employees and miscalculation of overtime and in some cases, the overpayment of employee salaries. A full external report by KPMG later confirmed issues with the Groups processes and the incorrect payment of employees.

The Group acknowledged that the business, which was established in 2006, did not have adequate payroll and human resources systems to cope with its growth and size. The Group assured employees that it has since appointed the CEO and a Human Resources Manager and has put in place processes and systems necessary for the business.

For employers, the Group’s mishap demonstrates the importance of establishing compliant employment processes and payroll systems from the start of a business. Such processes include:

  • Having a contract of employment which is compliant with the Fair Work Act 2009 (Cth) (FW Act) and the relevant Modern Award;
  • Checking if an employee is covered by a Modern Award and correctly classifying the employee under that Modern Award;
  • Setting up payroll system to facilitate paying employees their applicable minimum entitlements (for example relevant overtime or penalty rates and superannuation); and
  • Having good employment record keeping practices. The FW Act obliges employers to keep, amongst other things, pay and leave records for seven years.

Start-ups and small businesses in particular may think that they don’t need to worry about having proper HR and payroll systems. However, as can be seen from this case, there are wide ranging financial and brand damage ramifications for being non-compliant and/or having inadequate HR and payroll systems.


Similar articles

Employee dismissed for failing BAC tests

Cigarettes and cough lollies

In a recent unfair dismissal decision, the Fair Work Commission (FWC) has supported an employer’s decision to dismiss an employee for breaching its drug and alcohol policy despite the employer failing to strictly enforce the policy.


Vaccinations and the workplace

Shots fired

One of the most topical questions for employers during the COVID-19 pandemic has been whether they need to introduce policies that mandate vaccinations and, if so, what can be done to enforce them in the workplace.


Fine following workplace fatality quadrupled following Government intervention

Work health and safety legislation in Australia places significant duties and obligations on persons conducting a business or undertaking (PCBU) to ensure the health and safety of workers.


Commission orders employer to pay compensation as a result of its procedurally unfair disciplinary process

Procedurally disastrous

When investigating allegations of misconduct against an employee in the workplace, employers must ensure that any ensuing disciplinary process is kept distinct from and separate to from the investigation.


The importance of WHS refresher training

Not a “one and done” thing

It is an expected and necessary part of work health and safety (WHS) plans that all new workers receive relevant WHS training.


Casual Terms Award Review 2021


In March 2021, the casual employment amendments to the Fair Work Act 2009 (Cth) (FW Act) introduced a new statutory definition of “casual employee” and an entitlement to casual conversion as one of the National Employment Standards (NES).


Let's talk

please contact our directors to discuss how ouR expertise can help your business.

We're here to help

Contact Us
Let Workplace Law become your partner in Workplace Relations.

Signup to receive the latest industry updates with commentary from the Workplace Law team direct to you inbox.