What's up with underpayment? Why do companies keep underpaying employees and can we fix it?

Last week, we found out that not all that glitters is gold for Michael Hill employees, who've been underpaid by the jewellery chain by up to $25 million in the past 6 years.

But Michael Hill isn't the first company to underpay staff and it won't be the last. This recent saga comes off the back of a number of high profile underpayment cases such as Rebel Sport, Super Cheap Auto, Qantas, Lush... the list goes on.

You might be surprised that big companies, with an abundance of experience, resources and capable management, can't seem to pay their staff correctly. We're not.

Australia's industrial system is complex. There's the Fair Work Act, modern awards, and enterprise agreements just to start. They bring in a messy system of varying minimum wages, overtime, penalty rates, loadings and allowances. When the laws are this intricate, it's easy for companies to make a minor slip up. But when that occurs over a large workforce over a long period, the liability racks up into the millions.

So, are all companies doomed to fail?

No, provided they get their house in order by doing the following:

Get a basic understanding of our industrial system and its application, including figuring out what modern awards (yes, there could be more than one) apply to their business. Work out employees' minimum entitlements, including applicable rates of pay, overtime and penalty rates having regard to hours of work. Consider strategies to comply with minimum entitlements such as an "all-up" annual salary. Conduct regular reviews to ensure no employees fall through the cracks and that a small mistake doesn't become the next headline.