What to do if you’re being underpaid

But what should you do if you’re being underpaid? We’ve all had one dodgy employer who ‘accidentally’ forgot to pay you every other week (just me?). Talking about money can feel awkward; maybe you love your job and you don’t want to seem all about the money, or maybe you’re just not great at confrontation. You’re not alone - I’ve had many jobs and, at times, allowed myself to be treated poorly because I was too afraid to say anything.

Being underpaid is far more common than you might think. Research from payroll software provider Ascender found that over one in five (22%) Australians have been underpaid and, on average, were incorrectly paid three times a year. These errors cost employees almost $1.8 billion in lost wages every year.

Let’s change that scary statistic. If you think or know you're being underpaid by your employer, let’s walk through what you should do about it.

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How to know if you’re being underpaid

Before you go confronting your boss about how they’ve been underpaying you for weeks/months/years, you need to be certain of a) the fact you are being underpaid, and b) how much you have been underpaid. This way, you have a paper trail of evidence that you can provide them, you can feel confident in what you’re saying and you won’t cop any backfire from false accusations.

First and foremost, you need to have a look at your payslips; if you don’t have any payslips to look at, this is not only a big red flag, it’s illegal. Your payslip should have information such as how many hours you worked, how much you were paid, how much was paid into your super, and so on. Depending on whether you’re a casual or full-time employee, your payslip may look slightly different. For example, if you’re a casual, your payslip should say how much you're paid per hour, whereas if you work part-time or full-time your annual salary should be listed. Regardless, however your payslips look, have them handy for this next part.

Being underpaid could mean two things: you are being paid less than the minimum wage for your age and/or industry, or you weren’t paid what you were meant to be paid. To keep things simple, let’s break these two types of underpayment up.

Being paid below minimum wage

While I’ve never personally been paid less than minimum wage (that I know of), my best friend was once underpaid significantly by our old boss. Despite being 17 years old, she was being paid at the 15 year old rate which, at the time, was something like $9 per hour. When she pulled up our boss on it, he agreed to start paying her at the 18 year old rates immediately rather than back-paying her the hundreds if not thousands of dollars she was owed.

How did she find out? you may be wondering. The internet is a wonderful place where you can find many things, including this article and Fair Work’s P.A.C.T Pay Calculator.

Here’s a brief rundown on how the pay calculator works using a hypothetical example.

Let’s say you’re an 18 year old real estate receptionist that works on a casual basis. Your shifts are usually Tuesday, Wednesday and Saturday. You’ve been in the gig for about six months, and you’ve realised you’re being paid less than your friends in similar roles. Specifically, you noticed that your pay rate doesn’t change, even though you work on Saturdays and public holidays.

After inputting all this information into the P.A.C.T calculator, we can see that you should be getting paid an hourly rate of $18.91 during the week, $22.70 on Saturdays between 7am and 12:30pm and $41.61 on public holiday’s for a minimum of four hours work.

Double check your payslip as well as your bank account to make sure that your payments haven’t accounted for these different rates. You may find it helpful to calculate exactly how much you have been underpaid throughout your employment. Though it might take a hot-minute, it saves you needing to rely on anyone else's calculations (especially if they’re the ones that messed up your pay in the first place).

You can also use the P.A.C.T calculator if you’re a part-time or full-time employee. You may also find it helpful to look on job sites like SEEK or LinkedIn for similar roles in your field to find out what the average pay you should expect is.

Paid less than what you worked

Now, here is where I can relate. The same nightmare boss as mentioned above used to miss our pay cycle almost every week and, when he did finally pay up, it was a completely random amount. We also never received any payslips which, at the time, wasn’t illegal; just very dodgy.

More often than not, I had to manually keep track of all the hours I worked and how much I was meant to be paid each week to then cross-reference against his random payments. Also more often than not, I would have to remind my boss that he still owed me money, and he would say ‘next week I’ll catch up'. Did he ever catch up? I’ll let you take a guess…

Now that employers must provide payslips, it’s much easier to work out if you’ve been paid less than you worked. You can cross reference your hours worked with all your rosters, your payslips, and your bank account to make sure it’s all synced up. Maybe your payslip is wrong, or the payslip is right but the amount you were paid is wrong. Either way, collect your evidence and calculate just how much you were underpaid by.

Even if your employer seems lovely, reasonable and reliable, it never hurts to do a quick audit to make sure you have been paid correctly. After all, mistakes do happen; it’s entirely possible you were underpaid by accident. But it is your money and you need to be paid what you’re owed.

How to talk to your boss about it

With all your evidence in tow, it’s time to address the elephant in the room: your boss. Knowing you’re being underpaid is one thing, but doing something about it is a whole other can of worms. While I have done it before, I’m definitely not someone that should be giving advice on the matter. Thankfully, financial educator and best-selling money author Vanessa Stoykov is an expert, and she told us how best to speak to your boss about being underpaid.

“These conversations are always best in person, so set a meeting and take the information to your manager to discuss the disparity,” Ms Stoykov told Savings.com.au.

“The most important thing about this meeting is to not get emotional, make it based on the data, and don’t be too confrontational.”

Whether it was done by accident or on purpose, you need to bring it up with your employer and ask them to fix their mistake.

“If it’s an honest mistake, they will fix it or at least give you areas to improve on and work towards to achieve that pay rise,” she said.

“If they don’t do this, then it’s clear they are undervaluing you and you should either take it higher or leave.”

While talking in person is the way to go, having a paper-trail can also be helpful if the situation escalates or isn’t resolved. You may find it useful to send a follow-up email to your employer after the meeting, whether it goes good or bad, thanking them for their time and letting them know that you’re looking forward to the agreed resolution. If the resolution is back pay/a pay rise, you can breathe a sigh of relief. If the resolution wasn’t so ideal, you may need to explore other options.

What to do if your conversation doesn’t go well

Speaking of exploring other options, there is a chance that confronting your employer won’t go well, which is probably possible if the underpayment/s were done on purpose (also known as wage theft). Ms Stoykov said your first stop should be your human resources (HR) department, but if you don’t have any HR people to turn to, there are a number of free hotlines where you can get advice.

“You do need to weigh up your options though, as conflict can be extremely stressful for some people, and sometimes it’s better to value yourself and leave instead of constantly fighting with a manager who underpays staff,” Ms Stoykov said.

Here are a few numbers you may like to call for advice:

• Fair Work Ombudsman: 13 13 94

• Australian Union Support Centre: 1300 486 466

• Fair Work Helpline: 1300 736 191

Depending on where you live, there may be other helplines you can call specifically for your state or territory.

Taking legal action

If you realise you’ve been significantly underpaid, you may choose to take your employer to court. According to Australian Workplace Lawyers, different legal avenues exist depending on whether your claim is for wages and annual leave, bonuses, long service leave, or superannuation. But in any case, there’s a limit of six years once commencing legal action to recover your payments.

If the amount being claimed is based on a statutory/award/enterprise agreement entitlement or a contractual safety net entitlement for $20,000 or less, you can make a claim to the Federal Circuit Court using its small claim procedures for industrial matters. If the claim is over $20,000, the normal Federal Circuit Court processes and forms apply.

The Federal Circuit Court is a ‘modern, innovative’ court used to reduce costs and emotional stress for people seeking conflict resolution. It should be noted that there are delays that can be encountered in the Federal Circuit Court. You can visit the website for more information - www.fcfoa.gov.au

Australian Workplace Lawyers said that before you commence your claim, you should make sure you have the correct name of your employer (as per your payslip) and be clear about the calculation of what is being claimed as well as the nature of the amount claimed (i.e. is it wages, super, or something else?).

Australian Workplace Lawyers also has information on unpaid super, long service leave, wage theft, and what happens if your employer won’t pay up.

Unpaid super

If you’re an award-covered employee, you can bring a claim to the Federal Circuit Court for unpaid super. Alternatively, you can make a claim to your state or territory’s Industrial Magistrates Court.

Wage theft

Wage theft is a criminal offence in several states, so your employer/s could face prison time of up to 10 years. To charge an employer with the offence of stealing, you will need to prove that the wages were withheld on purpose and may need to provide evidence. Pressing charges against your employer may not result in you having your stolen wages returned. For more information, chat to your state police service or visit its website. Alternatively or if not applicable, you can simply take your employer to court over the matter.

Long service leave

State and federal governments haven’t been able to agree on a set of rules for long service leave, not to mention the current rules can differ from state to state. If you want to make a claim for unpaid long service leave, you can still make this claim in the Federal Circuit Court or the state industrial relations committee.

What happens if your employer won’t pay up?

There’s no guarantee that your employer will pay you back. If you obtain a judgement against your employer and they don’t pay it voluntarily, you may need to take steps to enforce the judgement. Australian Workplace Lawyers called this process ‘complicated’ and suggested obtaining professional legal advice beforehand.

You may be able to recover your minimum entitlements through the federal government’s Fair Entitlements Guarantee (FEG) scheme, wherein if your claim arose in the past 12 months and your employer has either gone into administration or liquidation, you can make a claim. Below are the types of claims you can make:

• Up to 13 weeks of unpaid wages

• Unpaid annual leave and long service leave

• Up to five weeks pay in lieu of notice

• Up to four weeks per year of service for redundancy pay

Tips for keeping on top of your payments

All the complex legal stuff can be a bit hard to digest. Not only is it complicated, the odds of you needing to take matters to court will completely depend on you and your situation. Importantly, going to court generally costs money, so it’s important to weigh up whether it’s genuinely worth it for you.

Let’s take a step back and look at something a bit simpler and applicable to everyone: keeping on top of your pay.

“You owe it to yourself to make sure you aren’t being underpaid,” Ms Stoykov said.

“It’s so important to take accountability for looking after yourself, and you’ll thank yourself in the future.”

Always look at your payslips

It’s easy to see your payslips coming through your email and thinking ‘meh, I’m sure it’s fine’, but it is really important to check every payslip you receive to make sure it's all correct. Then you should check your bank account and make sure everything lines up.

“If you don’t get one, ask for one,” Ms Stoykov said.

“Checking that you are being paid for the hours you worked, as well as keeping on top of what is being deposited into your super account, are all really important but also only take a few minutes.”

Check in on your super

As mentioned, checking your super is also really important. I’m definitely slack at checking in on my super balance; I think I’ve maybe done it twice in the past year. But it’s important to check your super is being paid into your account, and that this amount is at least meeting the 10% super guarantee (SG).

Check your super balance and cross reference your payments with your payslips. This is something you want to do semi-regularly.

To give you an example of why this is so important, the nightmare employer I’ve mentioned didn’t pay a few of my old colleagues their super for years and, by the time they realised, they were all owed tens of thousands of dollars each. They took him to court, but he never ended up paying it all back. Trust me, you don’t want to be in this situation.

Know your minimum wage

Everything might look right on your payslip, but if you’re being paid less than minimum wage, this is still underpayment and needs to be fixed. Using the pay calculator takes a few minutes and reveals the up-to-date minimum wage for your age and industry. It doesn’t hurt to make sure you’re being paid accordingly, and if everything is right, you don’t need to worry.

Get comfortable talking about money

If you fear you’re being underpaid, and after reading everything here you’re still not sure, try to have a conversation with your friends about it. Ask them if they mind sharing how much they’re paid, and tell them how much you’re getting paid. Talking about money can seem weird and awkward, but there’s nothing to be ashamed of. Talking to people around your age and in similar industries can give you real-life examples of how much you should be getting paid. You might even help your friend who’s being underpaid too.

Image by Markus-S on Unsplash