It’s easy not to like George Calombaris right now. Despite being a TV celebrity, a massively successful restaurateur and probably the driver of multiple luxury vehicles… George is now a publicly-exposed thief. What’s more, George – or rather, the enterprises of which George is the majority owner and public face – stole more than $8 million from his own employees, including some of the lowest paid workers in Australia (here’s looking at you, Grade 1 Apprentice Chefs).
So we’ve all whipped out the gourmet salted caramel popcorn to throw shade on George and watch his empire crack.
But the harsh truth of it all, and what anonymous punters and many optimistic accountants aren’t telling you?:
What happened to George could happen to anyone. It’s happening right now in lots of business all over Australia.
It could be happening to you right now. It could be years before you find out, like George, and it could cost you millions. If you’re in the hospitality industry like George, you could be one of the estimated 58% of employers not paying correctly. There’s lots of well-intentioned people reading about George right now, thinking ‘that’s OK. It’ll never be us.’ But can they really be sure? Were the ABC, Thales and Lush sure? They probably thought they were. But, ultimately – they were wage thieves, too. Which just serves to highlight how thin the line between trustworthy employer and Fair Work pariah really is.
The difficulty involved in getting payroll right is something we all understand at Aurion. Over our 30-year history and nearly 700 collective years of experience working in payroll, we’ve helped a heap of Australian businesses to get compliant – and stay that way. Rather than rip into George and other wage thieves like him, the Aurion team have decided to do one thing like George – we’re also dedicating our time and effort to educating Australian businesses about wage theft and how to avoid it. Over the coming week, we’ll be sharing our expert recipes for payroll compliance, wage calculation and payroll best-practice.
(Although unlike George, we’re doing it because sharing our stuff is the right thing to do, not because we were forced to by Fair Work).
George quite helpfully highlighted 3 specific ingredients that contributed to his empire falling afoul of employment law in a recent interview with the ABC. To start our ‘Don’t be Like George’ series, we’re going to take a closer look at these:
- Lack of business experience
- Rapid business growth
- Back office issues
Lack of business experience
George started out as a chef – a pretty good one. After years of meticulously curating his knowledge and building some wicked knife skills, George is one of the best chefs in the game. Island of Chios mastic panna cotta with Greek doughnuts, anyone? Mussels ‘spanakopita’? George is your man. Award interpretation with quality checks to ensure fair work compliancy? Maybe no.
George’s story is actually a pretty nice version of an all-too-common business fable – the skilled professional who turns their livelihood into a business… with mixed success. Some people like George are very successful (excepting his very burnt payroll soufflee). Sadly others will see their business and passion destroyed through their lack of experience running an actual entire business, rather than just doing the part they love.
Even if you’re an experienced business professional, you absolutely need the right tools and processes from day dot of your new venture. The moment your hobby or job becomes a business, your mindset should change that of a business owner, and you should act accordingly. This means engaging the support of a qualified accountant or bookkeeper, and the right tools to record your business activities from your first transaction. It also means managing things like PAYG and superannuation correctly from the day you start your business – even if you’re a sole trader. It’s tempting not to pay yourself properly, but you should – and in some cases you have to by law. If you have employees (or even if you don’t), make sure you engage the services of a payroll-qualified accountant, bookkeeper or service provider.
Think you can’t afford to run your business properly from the outset? There are lots of great, cheap tools with business tips and advice built-in – think portals like Business.gov.au and products like Xero for small businesses, and then specialist business-function products like Aurion as you grow.
Rapid business growth
Like George, Ray Kroc, Mark Zuckerberg or Scrooge McDuck – you’re the star of an awesome rags-to-riches tale where your business suddenly takes off, in ways you’d never imagined possible. It’s a great story, yes? Well – yes and no. It has it’s dark chapters, too. As the money rolls in and your business starts to grow, it’s not all Lamborghinis and swimming in a pool filled with gold coins. In a rapidly expanding business, you need 10 sets of eyes to keep focused on delivering the same quality outcomes to an ever-bigger pool of customers. For that you need more staff, all of whom need to be onboarded into a business with the tools and processes to receive them and maximise their input.
One of the critical points in the business journey is when you start outgrowing your tools and processes. Maybe your Accountant or Office Manager has been doing payroll in your accounting system. Maybe you have a bookkeeper who’s doing your payroll alongside your receivables. Either way, add some new starters here, some terminations there, a new award, expenses and timesheets et voila! A buffet of confusion. And a real compliance breach opportunity waiting to happen.
If your business is growing rapidly, your best option is to either hire an expert or rent one. If you hire a dedicated payroll person or expand your existing payroll team, you need to allow them time to understand your processes and tools, and to update them where required. Time to get up to speed should be factored into your resource calculations. You should also have dedicated processes for ensuring compliance – checks and balances.
Depending on your size and growth rate, renting an expert is often an easier option. Whether it’s asking your payroll-qualified accountant or outsourcing your payroll entirely, handing your payroll over to an expert will likely save you both time and money, as well as the considerable risk associated with payment issues and penalties.
Back Office issues
Poor communication costs money. According to a Holmes (a voice of the global PR industry) report, the cost of poor communication has hit an overwhelming $37 billion. We hear this a lot, but don’t often stop to understand how these costs are actually incurred in your business.
One of the ways they are incurred is through the catch-all term ‘back-office issues’, which encompasses all of the money and time you waste doing things wrong because the operations and administration functions in your business aren’t really in sync. Add to that business conditions which really turn the heat up on communication weaknesses – say the rapid growth or lack of business experience highlighted earlier – and you’ve got a real recipe for disaster.
A successful recipe for avoiding back-office issues? Don’t prioritise action over compliance. It’s good to be busy, but not if it’s going to cost you an unexpected $8 million. Invest in tools and processes to manage your business functions, and dedicate appropriate resources to their upkeep. Payroll solution not scaling up to your needs? Could be time for a new one. Don’t limp along with tools you know are putting you at risk because you don’t have time to fix them – there are a range of cheap and quick options for replacing outdated tools with modern ones.
Focus on boring stuff like compliance checks, adequate documentation and regular communication between all stakeholders. Focus means actually dedicating time to these activities, recording what is done by who and when so that your stakeholders stay accountable to each other, and building openness into your culture so that when things start going pear-shaped, everyone is able to work together at speed to get the best outcome.
In our next ‘What’s cooking?’ blog, we’re looking at common award interpretation errors and how to avoid them. In the meantime, you could also brush up on your underpayments knowledge. And if you’ve got questions about your payroll and how it could be better, make sure to reach out to our team.