With cost of living pressures escalating, there is even more scrutiny on the pay packets of South Australians.

Underpayment of wages has emerged as a high profile and very real problem for employees and employers right across the state.

The introduction of wage theft laws is often raised as a potential solution. Such laws would target employers who deliberately and dishonestly underpay their staff.

Experience suggests however that in the majority of instances, underpayments are the result of a genuine misunderstanding of complex workplace laws or payroll system errors rather than deliberate or dishonest conduct.

Further, statistics recently shared by the Fair Work Ombudsman indicate that large corporates are self-disclosing their payroll mishaps in record numbers.

I would suspect that a significant number of employers in South Australia are unknowingly not complying with their employment law obligations

The FWO reported that $532 million in unpaid wages and entitlements for more than 384,000 workers was recovered last financial year.

This total dollar figure was more than three times higher than the previous year and evidence of the tougher compliance and enforcement approach adopted by the FWO.

That being the case, the FWO also confirmed that $279 million of these underpayments more than half of the total recovered amount was discovered as a result of large corporates reporting themselves to the regulator.

Wage theft is already a crime in Queensland and Victoria. Employers in these states face the prospect of significant fines and jail time if found to have deliberately and dishonestly underpaid staff.

The South Australian Government is looking to introduce criminal offences for wage theft. Prime Minister Albanese has also committed to criminalising wage theft at the federal level.

The key to successful prosecution of such laws will be whether an underpayment meets the legal definition of deliberate and dishonest behaviour. This will require intention on an employer’s part to underpay their staff.

This, in legal terms, is quite a high bar. In my experience, underpayments tend to be inadvertent.

The self-disclosure of $279 million in underpayments last financial year would suggest that many employers are proactive when these issues are discovered. There is nothing deliberate or dishonest about that.

Employers in states without wage theft laws are still prohibited from underpaying their staff under the Fair Work Act 2009.

A significant aspect of my practice is assisting employers to understand the current framework of often very confusing and ambiguous workplace instruments.

Which industrial instrument applies, the application of intricate rostering rules and identifying the correct award level and corresponding wage rate for an employee are just some of the topics I work through with my clients every day.

To confuse employers further, there is often more than one potential answer to these issues.

This is not a problem reserved for smaller businesses in recent years Woolworths, Qantas and NAB (amongst a long list of other large corporates) have discovered payroll errors which have cost them millions in back-payments.

I would suspect that a significant number of employers in South Australia are unknowingly not complying with their employment law obligations.

Some employers falsely assume that just by increasing wages from time to time or adopting a perceived “market rate”, they are compliant with workplace laws.

However, if an employee is paid a wage which is inconsistent with a relevant industrial instrument, or their employment contract is silent on an applicable entitlement, an underpayment event can still arise.

It is therefore essential that employers familiarise themselves with their obligations, and ensure that their employment contracts and payroll system take these obligations into account.

By adopting a set-and-forget approach, businesses large and small are exposing themselves to significant legal, financial and brand reputation risk.

That said, in the absence of deliberate and dishonest underpayments, wage theft laws won’t be a complete answer to this problem.

Education and ongoing review remain critical for the majority of employers who are striving to do the right thing. It is only via these measures that we will see a true downward trend in underpayment statistics.

Cassie Burfoot is a Special Counsel specialising in employment and workplace relations law at Cowell Clarke.